Jubilee Northwest Coalition

[Picture of women walking in desert]

a member organization of Jubilee USA Network

Remarks by Neil Watkins at the

reception for Sharon D'Amico's photographic essay

"IN THE FACE OF DEBT"

St. Mark's Cathedral, Seattle, WA

February 12, 2006

Seeing the faces of debt remind me of my year in Africa and the people who were the faces of debt for me.

I lived in Senegal in 1996-1997, and I have two vivid memories. I was taking classes at the University of Dakar and the memory of walking to class one day as students began a strike because of just announced cuts to student aid. These cuts meant many of the students would have to return home to the countryside or face huge unemployment in Dakar. Cuts were made to the education budget so Senegal could pay its debts and meet conditions of a World Bank loan. Many of the students didn't come back the next semester.

The "faces" also remind me of walking through Medina, a poor neighborhood in Dakar, with people living in tiny rooms with 6-10 people in a small 1-space, sewage flowing through the streets. And young children - who should have been in school - following me as I walked through, begging.

Many of us have born witness to these scenes, the painful and unjust reality of excruciating poverty in Africa, Asia, and Latin America. It was in Senegal that I first connected what I was seeing daily walking through the streets in Dakar with what I was reading about how debt, and policies of so-called "structural adjustment" were a big reason why. When I came back I knew that there must be something we as Americans could do - as debt is controlled by out own government.

So as I started this work, it was the injustice, the indignity of extreme poverty that motivated me. But in working with Jubilee, I have found hope and working for change to injustice is at least as powerful.

The Jubilee Scriptures: A Message of Hope

The message of Jubilee is one of hope. In the Old Testament, God lays out the Jubilee vision of building right relationships. Jubilee grows from the original Sabbath practices described in Deuteronomy, Exodus, and Leviticus. The Sabbath Day, the seventh day, was when God rested and humans were to do the same. The Sabbath Year, the seventh year, entwined the themes of creation and liberation to proclaim the release of slaves, let the land rest, and cancel outstanding debts. In the Jubilee Year, every 7th 7 years or 50, Jubilee becomes a great vision of renewal during which the trumpet would sound throughout the land. The Jubilee vision is of a time to set things right, to restore life to suffering peoples, and to revive a sense of hope for all.

In the Bible, debt which hinders the very life of a nation and its people is not merely a financial condition for a few. It is a spiritual condition for all of us, a condition that requires our action to set it right.

We Are Making a Difference

The Jubilee campaign to cancel debts - founded in the US in 1997 - has taken the vision of Jubilee and translated it into a campaign that has put pressure on world leaders, our Congress, and institutions like the World Bank and IMF to cancel some debt.

First, during the Jubilee 2000 campaign, the Jubilee campaign won a commitment from President Clinton and other world leaders to fully cancel the bilateral debt of the world's poorest nations and to partially relieve the debts of the IMF and World Bank, two of the largest lenders to impoverished nations. This cancellation:

But the deal did not go far enough - it only relieved $1 out of $3 in payments poor nations were making to the IMF and World Bank. In 2001, Jubilee USA began campaigning for 100% debt cancellation of debts to the World Bank and IMF. For 3 years, Jubilee USA, groups like Jubilee NW across the country, together partners around the world built pressure. We wrote letters, delivered postcards, wrote op-eds and placed editorials, and introduced a bill called the Jubilee Act in Congress and kept the pressure.

In 2004, a huge opportunity came our way. We convinced the US Treasury, which was supporting grants instead of loans at the World Bank that debt cancellation was a form of "backwards grants." Together with the pressure Jubilee supporters generated, it moved the US government's position and in April 2004, the Bush administration for the first time announced support for "100% debt cancellation." But when no deal emerged in 2004, we set our sight on 2005, when Tony Blair in the UK was hosting the G-8 summit with an interest in focusing on African poverty.

Millions joined the Make Poverty History in the UK and around the world to demand a bold deal on debt cancellation, increased aid, and trade justice in July 2005.

With considerable fanfare, G-8 leaders announced a new deal on debt this summer in Gleneagles. The agreement will mean 100% debt stock cancellation of debts held by some multilateral creditors - the IMF, World Bank, and African Development Fund - for 18 of the most impoverished countries that have reached "completion point" in the HIPC Initiative. Up to 20 other countries may be eligible under the initiative, though it is unlikely that more than 10 additional countries will see benefits any time soon.

Jubilee USA Network welcomed the G-8 deal on debt announced on June 11 as an important first step. It is a testament to the efforts of people of faith and conscience across the US and globally as well as their allies in governments, for it is clear that the G-8 would not have taken up this issue without pressure and public attention. In the case of the 18 chosen countries, one of the demands of Jubilee USA's campaigns of recent years - 100% cancellation of debts stocks to the IMF, World Bank, and African Development Fund - has been achieved.

But even with the important progress, there is more to do. We can and must build on our successes. Not the least because the pandemic of poverty has not been stopped.

Even with the new commitments last summer, 10 million children, will die of hunger or preventable disease in 2006. More than two million will die of HIV/AIDS on the African continent in 2006. We are making a difference, but it's not enough.

The stark reality is that 9 out of 10 people in developing countries will remain unaffected by the G-8 debt deal.

There is a growing global consensus that much broader and deeper debt cancellation is clearly required if the global community is to have any hope of meeting the Millennium Development Goals, the goals agreed by world leaders in 2000 to halve extreme poverty by 2015.

Under the plan endorsed by the G-8, at most $56 billion in debt stock owed to the IMF, World Bank, and African Development Fund would be cancelled. By comparison:

So, the $56 billion on offer from the G-8 represents just over 10% of the external debt of low-income nations that require immediate debt cancellation to meet the MDGs. Even this estimate is low, as it does not address the need for debt cancellation of middle-income countries.

If we are truly serious about meeting the MDGs, we must tolerate no debt that impedes a nations' ability to meet the goals. Much work remains ahead of us.

Too many impoverished nations in Africa, Asia, and Latin America left out of the G-8 deal on debt will continue to pay more in debt service than they spend on critical social needs.

Up until now the debt discourse has focused too heavily on the problems of the poorest countries. Well over a billion people in Middle Income Countries live on less than $ 2/day, with 1/3rd surviving on less than $1/day. Ecuador, where more than half of citizens live on less than $2/day, owes $17 billion and pays twice as much on debt as health and education combined. It will receive nothing from the G-8 deal because it is classified as a middle-income country.

Debt to other regional development banks is not included in the G-8 deal. This includes debt to the InterAmerican Development Bank. The four Latin American nations included among the 18 beneficiaries - Bolivia, Guyana. Honduras, and Nicaragua - will still pay a total of almost $1.4 billion in debt service over the next five years to the Inter-American Development Bank (IDB). This is an area for expansion of the agreement that we hope will be remedied in the coming year. We are currently campaigning on this...

One of the most significant concerns we have about the G-8 debt agreement is that the proposal continues under the failed framework of the Heavily Indebted Poor Country (HIPC) Initiative. Under this approach, nations must be in compliance with harmful economic conditions in order to qualify for debt cancellation.

Jubilee USA Network opposes the linking of debt cancellation to countries' implementation of economic policies including those listed above. These policies have not been proven to increase per capita income growth and have had devastating impacts on livelihoods, increased poverty, and fostered environmental degradation.

Many HIPC countries have been delayed because they have not met IMF or World Bank requirements to reform their economic policy. For instance, Cameroon, an impoverished nation desperate for resources to reach the MDGs. Cameroon reached "decision point" in 2000; a March 2005 IMF report cites lack of implementation of economic policies contained in the country's PRGF loan program as a reason for Cameroon not yet reaching "completion point"; privatization of Cameroon's urban water service is a policy condition, among others. We ask: what does privatization of water have to do with debt cancellation? We reject economic policy conditions including water privatization.

We reject conditions, but we all agree on the need for accountability. As consensus grows on the need for a more comprehensive approach to debt cancellation, one of the most commonly raised concerns about debt cancellation is how to assure that proceeds from relief are not siphoned into the pockets of corrupt leaders and to be sure that they money actually gets to those who most need it.

This is a serious and real concern and civil society shares this concern. First, it is important to insist that the primary responsibility for ensuring accountability is civil society in the affected country - we must do more as a global community to support such efforts. But we also need to look at innovative measures for accountability. Such measures should separate the financing and delivery mechanisms of debt relief. One idea that some in the Jubilee network are discussing is the creation of peer-reviewed trust funds where donors would provide the financing for much broader debt cancellation but regional bodies like the African Union or parliament would make democratic decisions about governments whose governance problems might necessitate a delay in cancellation. It is clear that the creditors - the IMF, World Bank, and G-8 cannot and should not be judge and jury on these matters as they are now.

But debt is not just about charity, it is about justice. And this is where the concept of odious debts comes in.

We must also begin to address the substantial odious and illegitimate debt burdens plaguing developing countries. "Illegitimate debt" refers to debts that cannot be reasonably or morally ascribed to a country. This includes debts arising from failed projects, projects which were never completed or were not implemented due to corrupt practices, and projects whose primary purpose was channeling funds to external actors (such as consultants and multinational corporations).

"Odious debt" is an established international legal principle. Legally, debt is to be considered odious if the debts were contracted without the knowledge or consent of the population and the government used the money for personal purposes or to oppress the people. In cases where borrowed money was used in ways contrary to the peoples' interest, with the knowledge of the creditors, the creditors may be said to have committed a hostile act against the people. Creditors cannot legitimately expect repayment of such debts. A similar argument was made by the U.S. government in arguing for the cancellation of Iraq's debt.

In Indonesia, careful analysis of World Bank and other documents has found that nearly a third of the $30 billion in loans from the World Bank to Indonesia under former dictator Suharto were diverted towards corrupt uses. This odious debt argument also applies to debts contracted by the apartheid regime in South Africa, by Mobutu Sese Seko in what is now the Democratic Republic of Congo, Ferdinand Marcos in the Philippines, the military junta in Argentina, and many more.

Creditors must bear their share of responsibility for bad lending decisions in the case of odious debts. A classic example is the case of the former Zaire, where in 1980, the IMF's representative in Zaire, Erwin Blumenthal, warned his employers that there was no chance Zaire's creditors would ever get their money back due to the corruption of Mobutu. But in the decade that followed, the IMF, World Bank, US, and UK governments lent Mobutu another $8.5 billion, in exchange for his support in the Cold War. Creditors must acknowledge responsibility for bad lending decisions and cancel odious debt.

The House of Representatives in the Philippines passed a resolution in 2004 to engage in a public audit to determine the origins of their debt, especially under dictator Ferdinand Marcos. Debt audits are underway in Brazil and other countries as well. While these audits are underway, creditors should agree to a moratorium on receiving odious debt payments.

Canceling debt is not an act of charity by rich creditors or institutions. It is an act of justice. Consider that from 1970-2002, UNCTAD found that African nations took out $540 billion in loans, and over the same period paid back $550 billion. But today Africa owes almost $300 billion. The debt has been paid; it is time for a comprehensive approach.

To summarize, as we move forward we campaigning and calling on our government, the G-8, the IMF and World Bank, and other creditors to:

Finally, we must avoid the recurrence of the debt crisis - by providing grants instead of loans for development.

This year, the Jubilee campaign is focused on holding the G-8 accountable for its promises and on building our capacity and our movement for 2007 - the Sabbath year, 7 years after Jubilee 2000. When we look at where we have come since the 2000 Jubilee year, we find that we have not yet reached the vision of hope and renewal that is Jubilee. We think that a strong Jubilee call for debt cancellation and an end to global poverty is needed.

2007 is an important year to issue such a hopeful and prophetic vision. In 2007, the G-8 will meet in Germany - the site of the initial Jubilee 2000 commitments. It is the halfway point to the MDGs. And groups across the global South are mobilizing in their own countries to say "Don't Owe, Won't Pay" and commit not to pay the unpayable and unjust debts if they aren't cancelled. The WSF will be in Kenya - in Africa for the first time - and calls for a bold Jubilee are likely to figure prominently.

Many ways you can join the campaign for debt cancellation for global poverty eradication as we get ready for the Sabbath year:

More than a systemic injustice, debt is about peoples' lives. Debt is a major cause of the poverty that is so visible in the amazing photos here today. In the face of the suffering and brokenness of our world, let us unite behind a vision of hope, renewal, and justice, --a vision of justice and dignity for all. We have made real progress together; let us now work together to make poverty history.

I hope you will join with us in our efforts to turn these faces of debt into face of hope.

Neil Watkins is National Coordinator of Jubilee USA Network, the U.S. arm of the international movement working for debt cancellation for impoverished nations. Neil has worked as a policy analyst and campaigner on global trade and development issues since 1998, focusing on the impacts of trade and the international financial institutions in Africa and Latin America. Mr. Watkins' email is: neil@jubileeusa.org