The Campaign to Cancel the Debt:

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The Campaign to Cancel the Debt

• Who
• Owes
• Who?

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Must we really let our children die of hunger to
repay our debts?-Julius Nyerere, President of
Tanzania, 1964-86
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From the banks and governments of wealthy
countries, the arrogant answer to this question
for the past thirty years has been a resounding
YES ! Put debt payments to us, the wealthy,
above all human needs!
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Debt costs lives

• In the worlds most impoverished nations, the
  majority of the populations do not have access to
  clean water, adequate housing or basic health
  care.

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Every Year

• 2.2 million people die from diarrhea
• 1 million die from malaria
• Half a million women die of complications related
  to pregnancy
  
• 2 million deaths each year are caused by TB
• All of these deaths are poverty related.

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According to UNICEF, 30,000 children die each
day due to poverty. And they die quietly in some
of the poorest villages on earth, far removed
from the scrutiny and the conscience ofthe
world. Being meek and weak in life makes these
dying multitudes even more invisible in death.
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External Debt Contracted with an outside creditor


 
Public External Debt contracted by the governmen
t or a body whose debt is guaranteed by the state
Private External Debt contracted by private agen
cies - not guaranteed by the state.

Multilateral Part lent by multilateral
institutions like the IMF

Private Part lent by a private institution (a pr
ivate bank)

Bilateral Part lent by another state
 
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What Impact Does this External Debt Burden Have
On Human Development?
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Governments have to get US dollars for debt
payments.

• This means accelerated exploitation of natural
  resources always in terms unfair to the local
  populace and causing environmental degradation.

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farmers get thrown off the land and they flood
into cities to face massive unemployment and
grinding poverty.

• It means growing crops for export rather than to
  feed the population. Countries have to import
  food,

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Public Spending is cut for education, health,
water supplies, maintenance of infrastructures,
and housing

• The only areas where spending continues are the
  military and the police.

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How did things get to be like this?

• 1960s Private banks invest in developing
  countries
  
• 1970s Petro dollars loaned by banks
• 1973-75 Wealthy states undergo recession. Loans
  were made from these states to developing
  countries so they could buy goods from the
  wealthy states.
• 1968-1973 World Bank loans to finance
  modernization. This is a cold war strategy.
  
• The elite of some developing countries take a cut

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In the late 70s something happened.

• In 1979, Paul Volker was chair of the U. S.
  Federal Reserve and he raised interest rates to
  curb inflation.
  
• Money flowed in from around the world, and
  interest rates for loans soared.
  
• Other currencies fell in value relative to the
  dollar.
  
• Loans to the South went from interest rates of 4
  to rates of 16-18 or more.

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People in the developing Countries worked hard to
re-pay the debt. They grew more crops to sell,
they cut more timber, they mined more ore, etc,
etc. But this just drove down prices for these
goods.

• No income
• Devalued Currency
• Huge Interest Rates

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Another international financial institution comes
into play.

• If a country cant pay its debt or has other
  serious financial issues, the International
  Monetary Fund (the IMF) arbitrates between
  countries and financial institutions.

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The IMFs Structural Adjustment Policies SAPs

• Impose fees for education and healthcare
• End subsidies on necessities bread, milk, rice,
  fuel
  
• Reduce funds for non-productive programs
  education, health, housing
  
• Devalue local currency
• Give high interest rates to attract foreign
  capital.
  

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ANDMORE SAPs

• Develop export crops, mine ore, fish, sell
  timber.
  
• Eliminate custom barriers for imports
• Abolish control over movement of capital
• Institute tax programs which increase
  inequality
  
• Privatize public resources and companies

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Why these policies? Structural adjustment makes
sense only once it is understood that the IMF
seeks above all to serve the interests of
finance.

• Looking at the IMF as if it were pursuing the
  interests of the financial community provides a
  way of making sense of what might otherwise seem
  to be contradictory and intellectually incoherent
  behavior.-Joseph Stiglitz, Nobel Prize Winner

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Do the developing countries pay their debts?
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At least 20 per cent of developing country debts
can be described as odious.

• Banks in Germany, Switzerland, the UK and US as
  well as the IMF were the main financiers of the
  apartheid regime of S. Africa

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Odious Debt..

• In 1965 the CIA helped Mobutu Seko seize power in
  the Congo - Zaire. He received vast sums in
  loans from the U.S. government and the IMF. When
  he was forced out of the country he had a fortune
  of 10 billion.

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More Odious debt..

• In 1975 Ferdinand Marcos in the Philippines
  initiated a loan for the Bataan nuclear power
  plant. He got 100 million in kickbacks, the
  Philippines pays 200,000 every day in debt
  repayments and the plant has never produced a
  single watt of energy.

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MORE The Argentine dictatorship of 1976-83
borrowed from private banks with the backing of
the U.S. Much of this went into the generals
private bank accounts
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Malawi - in the grip of a severe food shortage

• Over the past 20 years, the agriculture sector
  has been restructured by the IMF and World Bank
  
• Subsidies for small farmers and the poor were
  reduced, price controls and regulations removed
  and agencies that played a social role, such as
  the agricultural marketing agency were
  restructured or privatized.

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Dola Sandram has come to a feeding center in
Chikwawa, Malawi, to register her 2-year-old,
Fredson, left. Such centers report a sharp
increase in the number of children being brought
in on the edge of malnutrition. -From NYTimes
Nov. 2, 2005
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• In the months before the famine was officially
  acknowledged, the countrys grain reserves were
  sold off.
  
• Creditor institutions have insisted that Malawi
  continue to service its foreign debt at a time
  when there is widespread hunger.
  
• Debt service still amounts to around 29 of
  Malawis government spending.
  
• Since there is now a shortage of grain Malawi
  will be forced to purchase grain from the US,
  including genetically modified grain. Malawi
  will have GM crops introduced by the back door.

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Due to the tsunami of 2004, the Paris Club issued
a communiqué an immediate and unconditional
debt moratorium for Indonesia.
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What they meant was that Indonesia would not have
to pay on the debt during 2005 but the interest
would still accrue and the payments made up. This
means the country will have to pay much more.
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Debt cancellation is not an optional act of
generosity on the part of the rich world.

• Debt cancellation is a necessary response to
  injustices that we have had a part in
  perpetrating.

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The U.N. Millennium Goals

• Reduce by half the proportion of people living on
  less than a dollar a dayReduce by half the
  proportion of people who suffer from hunger
  
• Ensure that all boys and girls complete a full
  course of primary schooling
  
• Eliminate gender disparity in primary and
  secondary education by 2005
  
• Reduce by two thirds the mortality rate among
  children under five
  
• Reduce by three quarters the maternal mortality
  ratio
  
• Halt and begin to reverse the spread of HIV/AIDS.
  and the incidence of malaria and other major
  diseases
  

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• Halt and begin to reverse the spread of HIV/AIDS.
  and the incidence of malaria and other major
  diseases
  
• Integrate the principles of sustainable
  development into country policies and programs
  reverse loss of environmental resources . Reduce
  by half the proportion of people without
  sustainable access to safe drinking waterAchieve
  significant improvement in lives of at least 100
  million slum dwellers, by 2020

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In 2000, the UNDP and UNICEF calculated that 80
billion a year for ten years would be enough to
ensure that the entire population of the world
had basic services such as decent food, access to
drinking water, primary education, and basic
health care.
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How much is 80 Billion a year?
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• Debt is the
• main
• obstacle to meeting
• basic human needs.

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Campaign to Cancel the Debt!

• The campaign became massive and popular in 82-90
  in Latin America
  
• European countries joined campaigns in the 90s
• Grew in late 90s into the Jubilee 2000 campaign

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Jubilee South formed in 1999

• Dont Owe,
• Wont Pay!

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Ireland Campaign
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Genoa 2001
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France 2005
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South Africa
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Seattle
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A first step The Multilateral Debt Relief
Initiative July 2005

• The G8, under massive global pressure agreed to
  cancel some of the debts of some of the poorest
  countries in the world.
  
• But, it took a year of constant follow-up work
  and pressure to get the G8, the World Bank, and
  the IMF to do what they agreed to do in July 2005.

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Much more needs to be done.
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Much more needs to be done!

• These first steps came with undemocratic and
  damaging strings attached.
  
• No acknowledgements by the creditors that many
  countries are paying off illegitimate debts.
  
• Poor countries as a whole are still paying more
  than 100 million a day to the rich world. More
  money is flowing out of poor countries than is
  going in.

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Take Action!

• The U.S. controls the IMF and the World Bank. It
  is up to us, in this country, to join with the
  people of the Global South to work to cancel this
  life-denying debt.

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What Can Be Done?

• Education There are several groups producing
  accessible educational tools. Plan a
  presentation, talk to friends, church members,
  school organizations about reading these and
  sponsoring a speaker from the Global South.

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What Can Be Done?

• The mainstream media needs to become a better
  source of information about conditions in the
  Global South and the need for debt cancellation.
  Take every opportunity to write letters to the
  editor and urge them to do more and better
  reporting.

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What Can Be Done?

• Engage Policy Makers Encourage elected
  officials at all levels to add their voices to
  the call for debt cancellation.
  
• The Institute for Policy Studies is working to
  support City Council resolutions in support of
  debt cancellation.
  
• Join with Jubilee USA Network and other groups to
  get members of the U.S. Congress to take a
  stronger role in the debt debate.

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What Can Be Done?

• Keep up with the work of Jubilee South and join
  international networks to increase pressure on
  global leaders in support of debt cancellations.