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Cyclone Idai Devastates Mozambique as Country Struggles Through Debt Crisis

Beira “will go down in history as having been the first city to be completely devastated by climate change,” said Mozambique’s former first lady on the devastation from Cyclone Idai.

Despite the UN describing Cyclone Idai as one of the worst-ever natural disasters in the southern hemisphere, the full scale of the crisis and its devastation has received relatively little media coverage.

The cyclone first struck Mozambique and coastal Africa in early March, but it bounced back out to sea only to return and head directly for Mozambique’s fourth largest city Beira. There, the first cases of cholera have been confirmed and the International Federation of the Red Cross (IFRC) estimated that 90 percent of Beira was destroyed.

Mozambique’s former first lady and humanitarian Graça Machel said Beira “will go down in history as having been the first city to be completely devastated by climate change.” Since hitting Mozambique’s coast on March 14, the cyclone’s death toll has reached more than 750, a number Mozambican environment minister Celso Correia calls preliminary.

Cyclone Idai, Mozambique, aftermath, 15-16 March 2019 (Denis Onyodi: IFRC/DRK/Climate Centre)

Cyclone Idai, Mozambique, aftermath, 15-16 March 2019 (Denis Onyodi: IFRC/DRK/Climate Centre)

Beira, which has a population of about 500,000, is a critical trading port in the region that distributes fuel to neighboring countries. The city’s mayor, Daviz Samongo, worked with the World Bank to create an extensive system of drainage canals and water retention basins to prepare for sea level rise. The $120 million-dollar project was successful in handling recent episodes of flooding but was no match for 150-mile-per-hour winds from the category 4 Cyclone Idai.

“[S]uddenly we have a cyclone category 4 hitting, and it’s very vulnerable,” Michel Matera, a senior urban specialist with the World Bank, told the Associated Press. “Yes, we were doing the right thing, but it was not enough.” Worsening the raw destruction to the region are the new confirmations of cholera in Munhava, an impoverished neighborhood in Beira.

Ussene Essi, Mozambique’s national director of medical assistance, commented on the cholera findings, saying, “We did the lab tests and can confirm that these five people tested positive for cholera. It will spread. When you have one case, you have to expect more cases in the community.”

Is a Second Disaster Coming to Mozambique?

The World Health Organization has warned of the potential for a “second disaster” if waterborne diseases like cholera spread in the region. WHO is preparing to send 900,000 doses of oral cholera vaccine to southern Africa from a global stockpile, with the shipment expected to be sent later this week.

Gert Verdonck, emergency coordinator for Médecins Sans Frontières in Beira, talked to the Guardian about the situation on the ground. “The cyclone substantially damaged the city’s water supply system, resulting in many people having no access to clean drinking water. This means that they have no option but to drink from contaminated wells. Some people are even resorting to drinking stagnant water by the side of the road. This, of course, results in an increase of patients suffering from diarrhea. The MSF-supported health centers have seen hundreds of patients with acute watery diarrhea in the past few days.”

The U.N. World Food Program now considers Mozambique one of its top concerns globally, in the same category as countries like Yemen, Syria and South Sudan, estimating that around 3 million people have been affected, nearly half of them children. Domestic strife, a crippling debt crisis, and surging jihadist terrorism further exacerbate the problems the cyclone unleashed. These interwoven issues hold parallels to other countries vulnerable to climate change, and understanding their connections is imperative to prepare for future disasters.

Cyclone Idai, Mozambique, evacuees in Beira, 21 March 2019 (Denis Onyodi: IFRC/DRK/Climate Centre) Aman carries his two children off a boat that has arrived from Buzi at the Praia Nova beach, next to Beira port.

Cyclone Idai, Mozambique, evacuees in Beira, 21 March 2019 (Denis Onyodi: IFRC/DRK/Climate Centre)
Aman carries his two children off a boat that has arrived from Buzi at the Praia Nova beach, next to Beira port.

History of Mozambique Corruption Hinders Recovery Ability

Mozambique was a Portuguese colony until gaining independence in 1975. The southern African country proceeded to wage a 16-year civil war between Frelimo, the ruling party which has won every election since independence, and Renamo, a rebel group founded and financed by foreigners like white Rhodesia and apartheid South Africa, which sought to prevent the newly independent nation from supporting black guerrillas in their countries.

A peace agreement was signed in 1992, granting Renamo legitimacy as a political party. According to an investigation by Foreign Policy, tensions between the two political parties remain more violent than commonly reported, with government aggression leading to the exodus of thousands of Mozambicans to neighboring Malawi in recent years.

After the peace deal in 1992, Mozambique quickly became one of the world’s 10 fastest-growing economies, with GDP growth averaging around 8 percent a year from 1995-2015. In 2010 abundant offshore gas fields were discovered that Standard Bank Group said could turn Mozambique into the next Qatar.

But in 2016 revelations that the state had secretly accepted $2 billion in government-guaranteed loans ignited a financial crisis. The parliament never approved the secret loans, and their disclosure led to the suspension of financing from the IMF, World Bank and Western countries like the U.K. and Portugal, as well as an investigation by the U.S. Department of Justice.

At least $500 million of the loan package is missing, with $200 million confirmed to have been spent on kickbacks and bribes for bankers and politicians. Loans that were supposed to finance fishing boats for Mozambique’s promising maritime sector (hence the name “Tuna Bond” scandal) were spent on military patrol boats at inflated prices. None of these boats has been deployed for cyclone relief response.

The Mozambican government later filed a lawsuit against Credit Suisse for its role in the “Tuna Bond” scandal, and U.S. Department of Justice has indicted three former Credit Suisse bankers. Former Mozambican Finance Minister Manuel Chang was arrested in South Africa as part of the DOJ investigation, as was Lebanese businessman Jean Boustani. According to the Financial Times, President Filipe Nyusi and his Frelimo party have remained largely silent following the revelations, with evidence implicating the party’s involvement in the scandal.

Tim Jones, head of policy at the Jubilee Debt Campaign, described the situation. “It is a damning indictment of the international community in general, and the U.K. government in particular, that three years after the secret loans were revealed, the unjust debt situation in Mozambique has not been resolved. There has been no sign of the U.K. authorities properly investigating the London banks for their role in the crisis. The failure to resolve Mozambique’s debt crisis in the past three years may now hamper efforts to rebuild following Cyclone Idai.”

These severe economic problems will limit Mozambique’s ability to respond to the areas the cyclone hit hardest. The government will likely be forced to refocus its security forces away from the natural gas-rich Cabo Delgado Province, where jihadist militants have been committing acts of terrorism.

Cyclone Idai, Mozambique, aftermath, 15-16 March 2019 (Denis Onyodi: IFRC/DRK/Climate Centre)

Cyclone Idai, Mozambique, aftermath, 15-16 March 2019 (Denis Onyodi: IFRC/DRK/Climate Centre)

According to the Jubilee Debt Campaign, government debt has grown in 80 percent of nations that suffered severe natural disasters within two years of their crises. Of the countries most vulnerable to climate change, more than half are at high risk of defaulting on their debt. This creates a vicious cycle where natural disasters devastate indebted, developing countries, putting them into deeper debt and inhibiting their ability to develop.

But not only does extreme debt impede relief efforts, bondholders use it as leverage to seize their debtor’s natural resources. In Mozambique that means natural gas.

According to the Financial Times, Mozambique will give bondholders up to half a billion dollars in future natural gas revenue as payment for their controversial debts. ExxonMobil and Andarko are planning mega projects in Mozambique’s Cabo Delgado province, with other major companies like Qatar Petroleum showing interest in the investment.

Frelimo, Fossil Fuels and Jihadists

On February 21, 2019, jihadist insurgents attacked an Andarko Petroleum convoy in Cabo Delgado, the first instance of violence against a fossil fuel developer in the country. Mozambique’s jihadist insurgency has confused analysts because the militants have been conspicuously quiet about their motivations and goals.

The new president of opposition party Renamo said the insurgency is part of a struggle with the national elite for control of Cabo Delgado’s rich natural resources. According to the New York Times’ Leigh Elston, an expert in Africa’s energy sector, “rising poverty and inequality are thought to be at its (the insurgency’s) root. The gas projects will further disrupt the area’s economic balance.”

The government has responded to the insurgency with mass arrests, which Human Rights Watch condemned, reporting, “[S]ecurity forces have allegedly arbitrarily detained, ill-treated and summarily executed dozens of people they suspected of belonging” to the militant group. Since the cyclone struck, Cabo Delgado’s governor has refused to allow the media to report on the jihadist uprising, having already detained two journalists.

Foreign Policy reports that Mozambique’s ruling party Frelimo has waged a campaign of terror against suspected Renamo supporters in recent years. Their investigation has implicated Frelimo soldiers in torching villages, rape and summary executions while blaming the opposition Renamo party with the state-owned media. Their findings are corroborated by the UNHCR, Doctors Without Borders and Human Rights Watch. A 47-page indictment filed in a U.S. court reveals internal communications that further incriminate the Frelimo party.

“To secure that the project is granted a go-ahead by the HoS [Head of State], a payment has to be agreed before we get there,” said one email to Lebanese businessman Jean Boustani, who was arrested at JFK airport and refused bail for his role in the Tuna Bond scandal. Former President Armando Guebuza was the head of state until 2015, but despite evidence he had to give the go-ahead to approve the multi-million dollar racket, prosecutors are not pursuing him. Another email from a redacted name says, “everyone involved will want to have his share of the deal while in office, because once out of the office, it will be difficult,” specifying, “there will be other players whose interest must be looked after, e.g., ministry of defense, ministry of interior, air force, etc.” Frelimo’s current president, Filipe Nyusi, was the Minister of Defense at the time of the email.

Alex Vines, Africa director at the Chatham House, told the Financial Times the U.S. was “unlikely to pursue Mr. Guebuza directly lest it risk retaliation against the U.S. firms that are increasingly betting on the country’s gas,” saying “Mozambique has become much more strategic to the United States.” In other words, because U.S. firms are involved in Mozambique’s natural gas production, the Department of Justice will avoid incriminating the country’s ruling class in the corruption scandal.

The “resource curse” is a term used to refer to countries endowed with rich natural resources that fail to develop, falling victim to greed and institutionalized graft. In Mozambique the ruling party has already proven itself corrupt and oppressive, and there is no evidence it would use natural gas revenue to uplift the population.

Cyclone Idai, Mozambique, response, 18-20 March 2019 (Denis Onyodi/IFRC-DRK-Climate Centre)

Cyclone Idai, Mozambique, response, 18-20 March 2019 (Denis Onyodi/IFRC-DRK-Climate Centre)

African Debt Crisis and Climate Change

Other African countries suffering from the resource curse, such as Angola, Chad, the Republic of Congo, Sudan and Nigeria, are also dealing with debt crises and destructive violence.

In Angola 44 percent of government revenue is spent on servicing external debt, with only 6 percent spent on healthcare (Angola has the highest rate of child mortality in the world). In Chad, a single company, Glencore, holds 98 percent of the country’s commercial debt. Chad devotes 85 percent of its oil revenue (its primary export) to repaying Glencore.

The Republic of Congo is negotiating its third bailout with the IMF. Sudan has stopped making payments on its $50 billion in debt, mostly acquired during the regime of corrupt dictator Omar al-Bashir. Nigeria, the country with the largest number of people living in extreme poverty in the world, alleges foreign oil and gas companies owe $20 billion in outstanding royalties and taxes.

The IMF warns that Africa is descending into a debt crisis, with 18 countries in the region holding debt-to-GDP ratios above 50 percent. China, with 20 percent of African nation’s debt, is the largest creditor nation. Transnational institutions like the World Bank are at 35 percent, while private creditors like Glencore hold 32 percent. Because private lenders, less open to debt forgiveness, hold a growing percentage of debt, the IMF has urged African countries to raise taxes on their citizens to remain solvent. In other words, the most impoverished populations in the world are facing tax hikes to subsidize corrupt politicians and financiers.

According to Natasha White of Global Witness, in these countries, “[T]he main incentive for (commodity) traders to lend is to secure access to oil, which means countries may mortgage off future oil production on set terms.” With a 2018 report from the UN showing increased risk from vulnerability to climate change causing an additional $168 billion in debt payments over the next 10 years, it is clear the practice of oil for debt is not sustainable.

Consequences Befall Those With the Least

The people least responsible for causing climate change are suffering its worst consequences. Corrupt leaders have driven their countries into crippling debt with predatory loans, enabling creditors to use their debt leverage to develop fossil fuels for private gain. At a time when the Intergovernmental Panel on Climate Change (IPCC) urges drastic cuts to carbon emissions to avert total catastrophe, and tighter transparency measures must be put on international finance. More Cyclone Idai’s are coming, and the time to change is running out.

In the words of 16-year-old climate activist Greta Thunberg, “Adults keep saying: ‘We owe it to the young people to give them hope.’ But I don’t want your hope. I don’t want you to be hopeful. I want you to panic. I want you to feel the fear I feel every day. And then I want you to act. I want you to act as you would in a crisis. I want you to act as if our house is on fire. Because it is.”

Peter Castagno

Peter Castagno is a co-owner Citizen Truth.

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