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Date: Wed, 16 Jun 1999 08:08:18 -0500
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Subject: Africa: Debt and G8 Summit
Africa: Debt and G8 Summit
Date distributed (ymd): 990616
Document reposted by APIC
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Region: Continent-Wide
Issue Areas: +economy/development+
Summary Contents:
This posting contains an announcement and executive summary of
a new report from the Jubilee 2000 Coalition (UK), documenting
the inadequacy of new proposals for debt relief to be
presented by rich countries at the G8 Summit in Cologne,
Germany, on June 18-20.
For additional information on opportunities for action on the
issue linked to the summit, see
http://www.jubilee2000uk.org
For additional links to a variety of sites and background
documents on the issue, see
http://www.africapolicy.org/action/debt.htm
For a strong endorsement of the need for debt cancellation by
prominent free-market economist Jeffrey D. Sachs, of Harvard
University's Center for International Development, see the
June 11, 1999 article in the New York Times on the Jubilee
2000 UK site:
http://www.jubilee2000uk.org/news/sachs14jun.html
+++++++++++++++++end profile++++++++++++++++++++++++++++++
Cologne Summit will offer 'crumbs of comfort' to the poorest
countries on debt, according to new report
A new report from Jubilee 2000 Coalition reveals that world
leaders are set to announce a deal on debt relief worth only
five loaves of bread or one bag of rice every year to the
average person in the poorest countries.
The information comes from inside intelligence and analysis of
proposals from the British, German and US governments in
preparation for the G8 summit, 18th - 20th June, when Third
World debt will be on the agenda. Using the most generous
offer, the British proposal announced by Chancellor Gordon
Brown in February 1999, Jubilee 2000 has calculated that
despite promising rhetoric, the G8 will offer each person in
52 heavily indebted poor countries on average $2.83 (1.84
pounds) each year. Every one of these people owes an average
$573 (349 pounds) to their Western creditors.
Ann Pettifor, director of the coalition said: "This report
reveals that despite flowery speeches and grand gestures, G8
leaders are offering only crumbs of comfort to the world's
most indebted nations. An unprecedented number of people will
amass in central London on Sunday, June 13th and in Cologne on
June 19th, to support the Jubilee 2000 call for the
cancellation of unpayable debts in the Jubilee year - 2000.
They will not be satisfied by these crumbs from the G8 table.
They are calling on the leaders to drop the debt now."
For the full report (priced 5 pounds / $8) contact Jubilee
2000 e-mail: [log in to unmask] or at 1 Rivington Street,
London EC2A 3DT.
----------------------------------------------------------
Crumbs of Comfort
The Cologne G8 Summit and the chains of debt
Executive Summary
The debts of the world's poorest countries are on the
political agenda. The worldwide Jubilee 2000 movement has
focused attention on the plight of people who bear the burden
of debts that deprive them of basic rights to health,
education and clean water - debts that entrench poverty and
deepen injustice.
The existing Heavily Indebted Poor Countries (HIPC) Initiative
has been exposed as being totally inadequate, with countries
paying only slightly less than before on debt service. This
failure has been compounded by the worldwide economic slump
and a drop in commodity prices.
With mounting pressure on them to seriously address the
problem, the leaders of the Group of Eight (G8) leading
industrialised countries preparing for their June summit in
Cologne competed with each other to promise improvements to
the HIPC Initiative. Sums of $50 billion, $70 billion and
more have been discussed. These are certainly large sums and
far exceed what has been suggested before. But creditors have
talked about writing off debt for more than twenty years. Are
these latest proposals going to deliver a genuine exit from
debt for the poorest countries? Will they help countries reach
the internationally agreed 2015 development targets?
The Cologne offer
Based on intelligence gathered and new research undertaken in
the build-up to the Cologne summit, this report reveals for
the first time that the improved HIPC initiative to be agreed
at Cologne will mean an average annual benefit of around $2.83
(1.84 pounds) for each person in fifty-two indebted countries
- enough to buy perhaps five loaves of bread, or one bag of
rice, every year. These are small crumbs of comfort.
The message is clear: Cologne will not release substantial new
resources for reducing poverty. The difference, if any, will
be marginal. By largely cancelling only the debt which is
not actually being serviced, creditors ensure the deal is
almost cost-free to them - and 'benefit-free' to their
debtors.
No exit from debt
* What is likely to be agreed at Cologne will not deliver
new resources to the poor. The increased sums being talked
about will still only write off what is not being paid anyway.
Equally, there will be no change to the highly criticised
means of assessing how much debt should be written off. Debt
"sustainability" remains almost entirely based on a country's
export earnings. We understand that the British government
have been defeated in its attempt to persuade other creditors
to use a formula for debt relief that would give debtor
nations a genuine exit from debt relief. The so-called 'fiscal
criterion' is based on real government budgets and looks at
how much countries spend on debt service compared to that
spent on health, education etc. Using it would produce
different, bigger numbers on the amount of debt relief
required for countries to become 'sustainable'.
* Cologne is unlikely to promise any extra debt
cancellation in the millennium year itself. At best, there
will still be a minimum of three years to qualify and a
further three years of strict economic conditions during which
debt relief can be withdrawn. Unpayable debt has been debated
by the lenders for 40 years; rather than end the crisis, the
lenders propose to continue the discussion while generations
of children are still unable to go to school. The leaders are
steadfastly refusing to seize the opportunity and deliver debt
relief by the new millennium.
* There has been no serious suggestions to change a
procedure which gives creditors total power. Using the debt
relief carrot to impose the structural adjustment policies of
the IMF, which many believe increase poverty, is unacceptable
to both Jubilee 2000 campaigners and governments of indebted
countries. The intended purpose of debt relief is to benefit
the poor. If the IMF refuses to minimise costs and maximise
benefits to the poor, it should no longer be a gatekeeper for
debt relief.
The Jubilee 2000 alternative
During the past year, Jubilee 2000 campaigns around the world
have defined much more clearly the goals to be achieved. They
stand in stark contrast to the little that is on offer.
* The Universal Declaration of Human Rights guarantees the
right to health and education. All donor countries have
accepted the target of halving the number of people living in
absolute poverty by the year 2015. Jubilee 2000 argues that
money must be spent on basic health and education before debt
service is paid, and that massive debt cancellation will be
needed to meet these targets. Thus governments who continue to
collect debt service from the very poor countries are
violating human rights and reneging on their own promises to
end poverty.
* The Jubilee 2000 call is for debt cancellation in the
year 2000. What we are being offered is another decade of
discussion about how we might finally write off a bit more of
the debt that is not being paid. It promises to some day free
a few people from debt slavery. It does not make the year 2000
a jubilee year - a year of a new beginning.
* Jubilee 2000 campaigners in impoverished countries stress
the need to disconnect debt relief from strict IMF structural
adjustment conditions. The United Nations and even the World
Bank itself criticises these conditions. Campaigners accept
the need for good governance and fiscal probity, but they
object to the IMF being allowed to be prosecutor, judge and
jury on their countries' performance, on the grounds that its
policies do not produce economic growth or reduce poverty.
* Jubilee 2000 campaigns in both rich and poor countries
demand that money released by debt cancellation be used for
poverty reduction and development, and they insist on
conditions to ensure this. But they argue that detailed
conditions imposed from the north have failed and will
continue to do so. Instead, debt cancellation should be
conditional on transparency and a locally developed poverty
action plan to use funds released. The Debt Review Body
proposed by the Jubilee 2000 director, Ann Pettifor,
introduces one way of setting up an independent and
transparent process involving civil society for debt relief
negotiations.
The challenge
Jubilee 2000 calls for:
* cancellation by the year 2000
* of the unpayable debt
* owed by the world's poorest countries
* under a fair and transparent process.
Despite the grand rhetoric and praise for Jubilee 2000 from
the world's leaders, their announcements do not meet these
goals. Tiny reforms to HIPC do not resolve the problem.
The G8 can yet confound its critics. It is still possible for
the leaders of the most powerful nations to take a bold stand
and cancel debt in the year 2000. To do so would be to take
a huge leap forward, for progress and justice. But the time
for small steps is long past. A billion people in the world's
poorest countries can live no longer on a few crumbs of
comfort. It is time to drop the debt.
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