Blog the Debt

From Geneva: A Challenge to Illegitimate Debt

By Neil Watkins

Last week, I had the opportunity to attend a meeting of the United Nations Conference on Trade and Development (UNCTAD) in Geneva about how the global economic crisis is affecting developing countries’ debt situations.

The conference brought together more than 350 participants from 100 governments, representatives of civil society like me as well as representatives from other official institutions including the IMF and World Bank.

One of the main themes of the conference was that the global economic crisis is hitting the poorest the hardest. As Musharraf Hossain Bhuiyan with the Ministry of Finance in Bangladesh pointed out, “This crisis was born in the advanced market economies but has major consequences in developing countries. Poor countries are the victims of developed countries’ mistakes.”

The crisis is also endangering some of the gains we have made as debt campaign. With markets for poor country exports down, governments have less income to pay for debts and to finance their government budgets.

As UNCTAD’s Secretary General Supachai Panitchpakdi pointed out: “Developing countries face a Hobson’s choice: Pursue debt sustainability or huge new borrowing. Both options are bad. Full debt cancellation and large increase in aid are needed instead.”

Can I Get a Witness? Faith Community Gathers to Support Climate Justice

Yesterday was a glorious day.

A sunny, bright, crisp fall day in Washington DC.

But don’t be distracted by the beautiful weather, said Rev. John McCullough, Executive Director and CEO of Church World Service. The climate change crisis is real, warned the Reverend as he spoke to a group gathered on the US Capitol’s northeast lawn for the Climate Witness and Day for People of Conscience.

Sponsored by a host of Jubilee Network Council members, including United Methodist Women, Church World Service, and the Unitarian Universalist Association, the event on this lovely day was both a practical call to action and a step in strengthening the faith community’s voice on the climate issue.

Climate change is a justice issue that affects not only our neighbors in the US, but our neighbors abroad. Citizens in the world’s most impoverished countries are the most impacted by climate change, yet has the least to due wish causing the crisis.

As people of faith, it is our duty to bear witness – and take action – to curb the devastating effects of climate change. The message of climate justice was lifted up throughout the morning by other speakers like Harriett Jane Olson, Deputy General Secretary of the United Methodist Women, and the General Secretary Rev. Dr. Michael Kinnamon of the National Council of Churches. Music from local DC residents Alicia Gill and Gordon Kent filled the crisp fall air and lifted our spirits.

The event was not just song and speech, though. The day culminated in the delivery of over 30,000 postcards to US Senators and constituent meetings with key decision makers on the need for a stronger climate change bill all leading up to the climate meetings in Copenhagen in December.
 

Trick or Treating with a Vulture Fund

By Devon Davidson

Looking for an attention-getting addition to your work to stop Vulture Funds?  The recent Jubilee Network meeting gave me an idea for a Halloween costume.  I dressed as a Vulture Fund! 

I transformed myself into a fierce vulture with a black robe with a hood.  I made a beak from construction paper and attached play money to the end.  Then I pinned a black shawl to the back by the neck and to the tip of the arms for wings.  I carried a sign that said, “I’m a Vulture Fund.  Give me a poor, indebted country to eat.”  Then I carried a handful of money to throw around.

 I’m sure you could add touches of your own to make an even more realistic and frightening vulture.  Then, at the party, I explained Vulture Funds to my friends.  But don't wait for next Halloween--use it to attract attention at a demonstration!

Tell Congress to stop what's really scary this Halloween

Click here to download Jubilee's newest Vulture Fund factsheet

Stand Up & Be Counted

By Hayley Hathaway

Stand up. Get up from your chair, your sofa, the floor, or your bed right now. 

Now imagine 117 million people all around the world, on every continent, standing up at the same time. This weekend, that’s what’s going to happen.

More than one hundred million people are taking a stand this weekend against global poverty as part of the Stand Up and Take Action Days. While many of us work on poverty issues everyday, talk about it at home and in our communities, once a year we have the opportunity to literally stand in solidarity with people across the world at the same time – all people who care about ending poverty once and for all.

Almost 10 years ago, world leaders committed to a bold roadmap to end global poverty and its root causes – beginning with achieving the Millennium Development Goals which include eradicating extreme poverty and hunger, improving maternal health and ensuring environmental sustainability by 2015. This weekend we are all coming together because we know that despite the gains we’ve made, the global economic crisis is threatening our progress.     

At Jubilee USA Network, our almost 100 Stand Up events across the country are focusing on one part of the poverty puzzle: debt cancellation and responsible lending. Without debt cancellation, we will not reach the Millennium Development Goals in time. Right now the world’s poorest countries pay rich creditors more than $100 million in debt payments everyday. Can you imagine if this money went toward shelter, education and health care?  

We know that it is possible. Debt cancellation has already brought increased education, healthcare and vital social services for many countries in Africa and Latin America. But too many needy countries have been left out.

This weekend, churches, synagogues and community groups will by taking the Stand Up Pledge to reach the Millennium Development Goals by 2015. They’ll also urging Congress to support the Jubilee Act, a bill which calls for expanded debt cancellation to help all the poor countries that need it to reach the MDGs.

This weekend, all over the world we are going to pledge our commitments to fighting global poverty. Let's continue to work to break the chains of international debt.

To learn more about Stand Up and to find out how YOU can stand up, visit www.jubileeusa.org

The Sumatra Earthquake: A Humanitarian Crisis

By Kristin Sundell

On September 30^th, a 7.9 magnitude earthquake devastated western Sumatra, killing upwards of 3,000  people.  Hundreds of schools were flattened along with tens of thousands of other public buildings.  In Padang, a city of 900,000 people near the epicenter of the earthquake, nearly all of the buildings were damaged and roughly a quarter were demolished.

Indonesian government officials have estimated that at least $600 million will be needed to repair basic infrastructure damaged by the earthquake.  Countries around the world have pledged and sent humanitarian assistance, but it is not enough to enable Indonesia to rebuild.  Meanwhile, Indonesia continues to send almost $9 billion every year to foreign governments and international financial institutions in payment on its foreign debt.

West Sumatra sits on one of the world’s most volatile fault lines, the same one responsible for the tragic earthquake and tsunami of December 2004, which killed over 200,000 people in 11 countries.  Geologists say that the region will experience an even deadlier earthquake in the coming years.  It is essential that the necessary resources are invested now to ensure that homes and public buildings can withstand future earthquakes.  Jubilee colleagues in Indonesia, including the Koalisi Anti-Utang (KAU/Anti-Debt Coalition) are calling on the Indonesian government to reallocate the money currently slated for debt repayment to finance reconstruction and to prepare for future disasters.  They are also urging the Indonesian government not to take on new loans to finance disaster response.  According to KAU Chairman Dani Setiawan, “Addition of new debt will only add to the burden on the state budget and preserve creditor intervention in economic policy making and Indonesian politics.”

When we hear of a natural catastrophe somewhere in the world, our first impulse is often to pull out our wallets.  Direct assistance to western Sumatra is definitely needed, but as Jubilee activists we must also amplify the voices and support the calls of our Southern partners by advocating for change in our government’s positions.  At minimum, the United States should support the complete suspension of Indonesia’s international debt payments until the country has fully recovered from the September 30 earthquake.  All international assistance in response to the disaster should come in the form of direct support or grants rather than additional loans. 

Beyond the current humanitarian crisis, Indonesia’s debt should have been cancelled long ago on grounds of odiousness.  Indonesia’s tremendous debt burden dates back to the brutal and corrupt Suharto dictatorship.  According to a 1997 leaked World Bank memorandum on corruption in Indonesia, World Bank resident staff believe that at least 20 – 30% of Indonesian development budget funds were siphoned off into the private accounts of the Suharto family and other government employees.  The memo also states that World Bank controls had “little practical effect” on such corrupt practices.  Despite these findings, the lending continued and the odiousness of Indonesia’s debt has never been addressed.   

Same Game, New Rules

By Julia Dowling

During the G-20 meetings in the spring, the IMF received a massive infusion of cash as a solution to the disproportionate affect the economic crisis is having on poor countries.  In response to this and the current World Bank/IMF meetings in Turkey, our colleagues at Eurodad have produced "Debt in the Downturn," a report with worrying conclusions.

28 countries now have “unsustainable debts,” meaning they do not have a large enough GNP pay their monthly debt bills.  The United Nations Conference on Trade and Development has an even darker outlook: 49 of the poorest countries in the world are showing serious signs of debt distress, and are at risk for a renewed debt crisis like that of the 1980s.  All this comes just as the World Bank and IMF are increasing their lending to middle and low income countries.

It’s become quite clear from the global economic crisis that it was irresponsible lending that got us into trouble, so why are the most powerful countries counting on more IMF and World Bank loans to bail us out?  Yes, these loans do put more money right now into the hands of governments hurting the most, but the long-term harm coming from deep indebtedness is simply not worth the benefits.

 

How did the G-20 excuse their decisions despite civil society’s clear objections before, during, and after the summit?  The Eurodad summary explains that, “To justify its stepped-up official lending programme, rich country governments have pressed the World Bank and IMF to re-write their rules on debt sustainability.”  Instead of addressing root causes of poverty and indebtedness of poor countries, the G-20 put a big, $500 billion bandage on the problem. 

Instead, the US should treat the cause of the wound by demanding real World Bank and IMF reform. We want a new game, in which everyone wins.  In this way, we might be able to both prevent a renewed debt crisis and fix the problems we’ve set out to fix—crushing poverty only made worse by the economic crisis.    

 

To read the full report, go to Eurodad’s website.

Jubilee Hits the Town in Pittsburgh

Been sitting on the edge of your seat reading about the G-20 Summit this week? If so, you've probably seen mention of the Jubilee USA team in Pittsburgh, spreading the word about the importance of Global South voices in the debate over the global economic system.

Check out the news so far:

• "IMF Chief Urges More Aid for Poor Countries"* By Harry Dunphy, Associated Press, September 12 *This article was taken from Nola.com but has also been featured in the Taiwan News, AOL Australia News, and The Economic Times in India
• "Sunday G-20 Forum: Lift the debt burden on poor countries" By Reverend John Welch and Ruth Messinger, featured in the Pittsburgh Post-Gazette September 20
• "Permit snafus strike first marches: Demonstrations for jobs and the poor begin the week's protests" By Ann Rodgers, Pittsburgh Post-Gazette, September 21
• "G-20: The Global South Is Too Big To Fail" by Hayley Hathaway, writing for Sojourners God's Politics Blog, September 22
• "The G20 Must Wake America Up" By Kevin Gallagher, The UK Guardian, September 24
• "Protesters to leaders: Stay true to Africa" By Karamagi Rujumba, Pittsburgh Post-Gazette, September 25
• "G-20 and the World's Poor" Mark Leon Goldberg, UN Dispatch, September 25

If you want to get your voice heard, click here to take action and send a Letter to the Editor today

The G-20: Falling Short for the Global South

By Julia Dowling  

What does it mean to the world’s poorest citizens that the G-20 is meeting September 24-25 in Pittsburgh?  As Jubilee’s latest research shows, the G-20 haven’t made enough of their great improve the economic and financial conditions that are affecting millions in the Global South.  As the world descends deeper into the financial crisis, it’s become clear that low income countries are the hardest hit, and the people living in these countries are suffering the most.  At the spring G-20 summit in London, President Obama stated, “Finally, we are protecting those who don’t always have a voice at the G-20, but who have suffered greatly in this crisis.”  Despite this statement, recognition of responsibility to poor countries hasn’t yet translated into enough money or real change on a household level.

During their spring summit, the G-20 committed a total of $1 trillion to developing countries, of which $50 billion is supposed to go to the poorest, low income countries.  Of this $50 billion, Jubilee USA has only seen $23.5 billion delivered.  Furthermore, the G-20 decided to rely on the World Bank and, especially, the International Monetary Fund fulfill such commitments.  

What do these decisions mean for low income countries?  Upon turning to the well-funded international financial institutions for assistance, the poorest nations can look forward to further indebtedness and a deepening of the crisis—the IMF will provide the new money as loans, not grants, and will still require a number of illogical and often harmful conditions.  Just this year, when Ethiopia badly needed resources to curb the affects of the crisis, the IMF required them to cut domestic fuel prices in order to secure a loan.  On the ground, this means that rising fuel prices prevents the poorest Ethiopians from taking long, difficult journeys to get basic medical services.  IMF policies have, through restrictive fiscal measures, forced people in the most vulnerable countries to choose between such basic necessities as transportation and food. 

Pittsburgh Post-Gazette: Permit snafus strike first marches

The G-20 summit is already causing strong responses out of civil society, and it hasn't even begun yet!  On the front page of the Post-Gazette an article describes one such event at the Smithfield United Church of Christ.  Privilege Hang'andu, our guest speaker from Jubilee Zambia, was at the event and is eloquently quoted in the article.  Check out Privilege's words below: 

Permit snafus strike first marches:Demonstrations for jobs and the poor begin the week's protests

By Ann Rodgers, Pittsburgh Post-Gazette

"The interfaith event began Smithfield United Church of Christ. It was a politically and religiously left-leaning crowd. Folk singer Anne Feeney opened with a song satirizing opponents of same-sex marriage.

The big ovations came for two speakers from the trenches of global poverty. Benedicto Martinez Orosco, co-president of a major labor federation in Mexico, said that corporations have pushed people off their ancestral lands and polluted what's left, forcing many to migrate to the United States. Privilage Haangandu, debt program officer for the Jesuit Center for Theological Reflection in Zambia, described poor nations burdened with enormous loans that their corrupt leaders had received and then stolen. He described a family of seven that took turns eating because they couldn't afford to eat on the same day.

'This is the message that millions of people in Africa want to put to the G-20. ... We want a complete overhaul of global economic architecture,' he said.

'We are going to spent $10 million ... on security for a few days in Pittsburgh when millions of children are starving.'"

Pittsburgh Post-Gazette: Sunday G-20 Forum: Lift the Debt Burden on Poor Countries

On Sunday, September 20th the Pittsburgh Post-Gazette published an op-ed written by Reverend John Welch and Ruth Messinger, talking about the moral obligation to cancel poor countries' debt in order to improve basic living standards.  Read their inspiring call to action below:

Sunday G-20 Forum: Lift the debt burden on poor countries. Without debt relief, the developing world has little hope of economic progress

By Rev. John Welch and Ruth Messinger, published in the Pittsburgh Post-Gazette

This week, when leaders of the most powerful and wealthy nations in the world gather here in Pittsburgh for the G-20 summit, they can strike a powerful blow for social justice and humanitarianism. By taking concrete steps to fight global poverty, especially through cancellation of the debt burdening poor countries, they can ease human suffering and bring hope to some of the most desperate places on Earth.

The global financial crisis, which has devastated families in Western Pennsylvania and nationwide, is having an even more dire impact in the developing world. Throughout sub-Saharan Africa and the rest of the global South, children who should be in school are instead hospitalized with diseases that could have been prevented with simple vaccinations. But the money many of these countries should be spending on basic education and health care is instead being funneled to multilateral banks in the form of steep debt payments.

The affected countries didn't land in this predicament just by their own irresponsibility. If anything, they are paying the price for recklessness on Wall Street. They have often been victimized by bankers who aggressively made loans to brutal and corrupt governments, knowing full well that those loans would not benefit the people. In many cases, soaring interest rates and compound interest make it impossible for these countries to eradicate debt even after scrupulously making their payments time and again.

The G-20 nations do appear to be coming through with increased assistance in the form of new International Monetary Fund loans. But for the very poorest countries, more loans -- on top of the old ones they can't manage -- may be pouring fuel on the fire.

If they are serious about helping the poorest countries through this worldwide depression, they must implement a bold program for additional grants and expanded debt cancellation. And they must move quickly to establish strict guidelines for responsible lending and borrowing, cracking down on predatory practices that exploit rather than empower debtor nations.

As a first step, they must condemn and regulate so-called "vulture funds," which buy up poor countries' debt for pennies on the dollar on the secondary market and then swoop in to sue for millions in damages. These funds usually operate stealthily, with little transparency, basing their operations in tax havens like the British Virgin Islands