Blog the Debt

Vulture! Vulture!! Vultures!!!

By Oumie Joof, Jubilee Communications Intern

It has been an exciting couple of weeks at Jubilee--not everybody gets to help poor nations through debt cancellation, visit the Supreme Court, go to Congressional hearings about the IMF and eat at Good Stuff where Michelle Obama went to eat a good old fashioned burger.

Today Jubilee is asking its grassroots to call their Representatives in support of the Stop VULTURES act. Yes....I said "Vulture." The first time I saw it on the agenda for the staff meeting, I really wondered what it could mean. Now I can explain it to you:

There’s a practice where a creditor sells the debt of a poor country that’s struggling to pay its debts to a private creditor. These debts are usually bought for much cheaper than they are worth, pennies on a dollar. If the new creditor is a Vulture Fund, it patiently waits for the poor country to get debt cancellation and then sues them in a British or American court for much more than they bought the debt for, often for the original amount of debt and more. This way, they can make up to tens of millions in profit. Although it’s not illegal, it’s ridiculous and unjust! It prevents these countries from harnessing the benefits of debt cancellation to improve health care, education, infrastructure and other basic necessities.

As expected, these countries have to be saved from these scavengers. Luckily, the "Stop VULTURE Funds Act"(HR 2932) has come to the rescue. Introduced by Representatives Maxine Waters and Spencer Bachus, this act will prevent Vulture Funds from collecting more than 6% interest above the original purchase price of the debt through US courts. Vulture Funds would also be required to operate in a more transparent and fair manner. A limit of 6% profit is not attractive enough for “Vulture Funds” to remain in this line of business for much longer.

YOU! can help this Act get passed. Just pick up your phone, dial 202-224-3121 (Capitol switchboard) and ask your US Representative to co-sponsor the bill!(Click here for help)

One last thing before I forget: my name is Oumie Joof, the proud Data Management and Communications Intern at Jubilee USA. I am from The Gambia, grew up in Nigeria and attend Ohio Wesleyan University.

Intern at the House

Jubilee USA welcomes Brian Tan, an undergraduate student from Texas with the United Methodist General Board of Church & Society as the Policy intern this summer. Brian attended a congressional hearing of the House Committee on Foreign Affairs last Wednesday, June 10th.

Meeting my Senator, joining policy calls, and attending a congressional hearing on economic foreign affairs- what a way to start my first week with Jubilee USA!

As the Policy intern this summer in Washington, D.C., I am excited to expand my perspective on economic justice. I was placed here through the United Methodist General Board of Church and Society and their summer internship program, and I look forward to learning more. I am an undergraduate student majoring in International Affairs, and I recognize that understanding economic policy is an increasingly important aspect to politics, especially now!

Coming to the Jubilee USA office every morning has been an experience on its own; the route takes me past the Capitol building, the Supreme Court, and the Library of Congress. It’s quite a walk! Meeting the staff and joining the community here has been a seamless transition, too, from my summer vacation at home in Dallas, Texas. My knowledge on debt cancellation is admittedly limited, but getting accustomed to the issue and current policies has been a cinch. I’m looking forward to my summer with the staff here!

Last Wednesday, on only my third day of work, the interns and I were invited to attend a hearing of the House Committee on Foreign Affairs that would focus on the International Monetary Fund (IMF). I had never been to a congressional hearing, so I was eager to attend! We left the office and took a short walk to the House hearing room, where the committee and five witnesses discussed economic policies, specifically the financial crisis and lending by the IMF. The hearing room itself was a grand space, but my most notable observation was the audience, filled with other young adults like myself. It was empowering to find so many other young people interested in economic policy and in a federal hearing for current issues. It’s good to know that I’m not alone!

The hearing began with opening statements by the Chairman and other committee members present; I am still learning about Jubilee USA and our focus to harmful lending, but I noticed that the committee largely focused on security concerns with loans and maintaining the United States’ status in the financial crisis. One committee member mentioned a need for “American values to be reflected in our foreign and economic policy,” and there was much attention to U.S. economic strength and protection.

I appreciated the focus on debt relief and the discussion on additional IMF funding to give loans, but as I have been growing to understand more as a Policy intern, I realized how this hearing seldom focused on nations who are struggling with loans. Instead, it gave significant attention to China and other successful economies and how to maintain our status amongst them. Luckily, debt relief is at least relevant and discussed, and concerns were raised by the committee to remember harmful lending policies, such as limits on education and healthcare spending to focus on loans.

Getting a perspective from congressmen and witnesses was enlightening, because it enforced the present mindset of American pride and maintenance that exists within foreign affairs. I am glad, however, that those concerns about irresponsible lending were discussed, as that is what Jubilee USA fights to stop. Knowing that congressmen raise up our issue in committee makes me all the more passionate to work for it!

Attending the hearing was a great experience, and I’m looking forward to all of the opportunities that Washington, D.C. has to offer. Jubilee USA is an excellent organization to explore these issues; I am already learning so much. There is no better time or place to be involved with economic policy!

IMF Needs a Reality Check, Not a Blank Check

Lots of news and action continuing around the International Monetary Fund. See Jubilee's recent blog on God's Politics.

by Hayley Hathaway, June 4, 2009

Earlier last month, President Obama requested $108 billion in new money for the International Monetary Fund to show the world that we stood up for our commitments to fighting the global recession. Now leaders in the House and Senate are meeting to figure out the nitty-gritty of this request, which has been pasted into the controversial war funding bill Congress is slated to vote on early next week.

The question is: How can we make sure that the IMF uses this money to really fight the economic crisis abroad? Over the last few decades, the IMF’s holy grail of privatization, deregulation, and trade liberalization has actually helped fuel the economic crisis and put millions deeper into poverty.

Ask the IMF’s Managing Director, Dominique Strauss-Kahn, and he’ll say the IMF has seen the light and has reformed its ways – but look at the institution’s loans given out during the financial crisis, and you’ll see the same old pattern. The IMF just keeps imposing conditions that restrict governments’ spending instead of allowing them to do what the U.S. and Europe are doing – stimulating their economies by investing in jobs, education, and health care. Instead, many countries with new IMF loans are having to freeze spending. Thanks to continued pressure from activists, civil society, and Global South governments, the IMF has improved on some of its policies and rhetoric, but recent loans show they have a long way to go.

Now Congress might give the infamous institution a blank check. If anything’s going to change, new money for the IMF must only come with significant reforms – reforms which will allow countries around the world to respond to the crisis with stimulus spending (and not restrict health care and education spending). To avoid the debt trap, money should come in the form of grants or debt relief, not new loans. To make sure the IMF is doing its job, Congress must also require key improvements on the institution’s transparency and accountability.

Over the past week, citizens across the country have been working to build pressure for fundamental change of the institution by calling on their senators and representatives and urging them to not give the IMF a blank check. Right now, Rep. Maxine Waters (D-CA) and 41 representatives have signed a letter to House Leadership urging these key reforms. A Senate amendment introduced by Senator Brown proves we can get our voice heard – the amendment attempts to blunt the IMF’s impact on poor countries’ health and education spending. These are the first steps to broader change. This time around we have rare opportunity to reform an institution with a troubled past and ensure that our precious U.S. taxpayer dollars help – and don’t hurt - our brothers and sisters around the world.

Op-ed: The Danger of IMF Policies

As you all should know by now, Congress will be voting in the next week or so to increase money for the International Monetary Fund. Read this great op-ed in the Boston Globe on what new money for the institution will look like for people around the world if the money's given without real reforms. Haven't taken action yet? Click here

The Danger of IMF Policies
By Joia S. Mukherjee and Brooke K. Baker  |  June 1, 2009

AS THE WORLD financial crisis continues, rich and poor countries seek money to meet their budgetary  obligations and fund vital domestic programs, including health and education. At the G-20 meeting in London last month, an agreement was reached to increase the resources of the International Monetary Fund by up to $750 billion to assist developing countries in this time of crisis. In this spirit, the Obama administration authorized an additional $100 billion credit line to the IMF and the sale of IMF gold to help create an endowment for the fund's operating expenses. Both proposals are in the war supplemental bill that passed the Senate before recess and will be conferenced by House and Senate members early this week.

IMF policies have consistently constrained government spending in poor countries with the goal of decreasing a hypothetical risk of inflation and of limiting the size of the public sector. These IMF policies are especially dangerous when poor countries are plunging deeper into poverty as their economies shrink and revenues fall.

Unfortunately, neither Congress nor the administration imposed needed reforms on the IMF's ultra-conservative lending policies. The United States has a controlling interest in the IMF and can mandate reforms that exempt health and education from the spending caps. While the IMF claims it is voluntarily loosening its fiscal stranglehold, a recent review of nine post-crisis loan agreements shows that the IMF continues to restrict government spending, mandating wage, employment, and general public-sector cuts.

A New Financial Crisis Around the World

Check out this great article featured in the CQ Weekly last week.

By Joseph J. Schatz, CQ Staff

CQ WEEKLY – IN FOCUS
May 18, 2009 – Page 1139

After more than 20 years of dictatorship and civil war, the West African republic of Liberia held democratic elections in 2005. That was the good news. The bad news was that Liberia owed nearly $5 billion to foreign countries, international organizations and private creditors — an amount more than eight times greater than its gross domestic product.

Four years later, the country is still wrestling with high unemployment and a life expectancy of just 45 years. But its debt is shrinking rapidly.

In early April, with help from the Treasury Department, the World Bank and European donors, Liberia concluded a deal with a group of hedge funds and other private creditors to buy back $1.2 billion of its commercial debt at just 3 cents on the dollar. That move reduced the country’s overall debt burden from about $3 billion in 2008 to just $1.7 billion.

The deal “wipes the slate clean and allows us to look at potential new debt in a more responsible manner,” says M. Nathaniel Barnes, Liberia’s ambassador to the United States. Barnes says that Liberia’s leaders plan to use the money saved from servicing the debt to fund hospitals, clinics, road construction and schools, and ramp up security before its 2011 elections.

The country’s creditors went along with the agreement, since most of them had bought its debt on the secondary market at large discounts — meaning that even 3 cents on the dollar may have represented a profit, according to Lee Buchheit, a partner at Cleary Gottlieb Steen & Hamilton LLP, a Manhattan law firm that represented the Liberian government during the negotiations.

The forgiveness of foreign debt in the developing world has long been a celebrity cause, with figures such as U2 frontman Bono leading the charge. But more recently it has evolved into a mainstream economic and foreign assistance strategy by the world’s wealthy countries, including the United States. And with credit difficulties assailing economies across the globe, the plight of debt-ridden developing nations has taken on renewed urgency.

No one has yet authoritatively demonstrated whether debt relief programs directly improve governance and poverty rates in the developing world. But they do produce a strong and measurable impact on national budget ledgers. The United States — which administers debt programs through the Treasury Department’s Office of International Affairs and via the World Bank and other institutions — has forgiven more than $24 billion in debts since 1991, much of it recently in 20 countries in sub-Saharan Africa. Following these efforts, along with those of other wealthy countries, two-thirds of sub-Saharan African nations now have “low or moderate” debt burdens, according to the International Monetary Fund.

The issue has taken on special urgency in the global financial crisis, with contracting credit markets increasing the likelihood that countries recovering from earlier debt crises could slide back into unmanageable amounts of debt. A recent IMF report warns that for countries across the developing world, “higher borrowing to help offset the impact of the crisis could reverse these gains and pose risks, in particular in countries that are at higher risk of debt distress.”

“The financial crisis is putting a lot of pressure on poor countries everywhere,” notes Neil Watkins, executive director of Jubilee USA Network, a coalition of religious, charitable and development-oriented organizations that back debt forgiveness efforts. “It’s unfortunate because we’ve actually been making some progress. Ten or 15 years ago, our organization . . . would go lobby the U.S. government or the World Bank or the IMF and they would literally laugh.”

Archbishop Desmond Tutu pays Jubilee OR a Visit

Some really exciting news coming out of Portland, OR!  Last week Archbishop Desmond Tutu made time in his schedule to visit with new and old Jubilee activists. Read Pat Rumer's and Annah Sidigu's report from what sounds like an amazing, inspiring, and motivating gathering!

Some words to preface the event from Pat Rumer, Jubilee Oregon board member and Jubilee USA Network Coordinating Council:

"'You never know until you ask' is what Jubilee Oregon learned when we wrote Bishop Tutu's staff in January, 2009 asking if he would stop by and greet long-time Jubilee activists when he was in Portland to lecture at the Ecumenical Ministries of Oregon Collins lecture series.  Well, about ten days before the EMO event, we received a note from South Africa saying that he would come and join us for a few minutes in the morning. 

We got busy and called all our Jubilee congregations ( 18 in all) plus 11 member board and a few really die hard activists over the past ten years PLUS staff from Oregon's Congressional delegation who helped us achieve 100% co-sponsorship of last year's Jubilee ACT in the Senate and House.  As you can read from Annah's review, it was a great event. So never hesitate to ask..."

Jubilee Oregon Welcomes Archbishop Desmond Tutu!
by Annah Sidigu

Jubilee Oregon was pleased to receive Archbishop Desmond Tutu at our monthly board meeting today. Archbishop Tutu, the father of the Jubilee movement, stopped by on the way to his  scheduled engagements to offer a few words of encouragement and reflection.

Archbishop Tutu’s remarks were hopeful and tempered with realism. Emphatic in his belief that no one can win the war against terrorism, the Archbishop also noted that, if we reduced our war expenditure, we could spend more money on feeding the hungry across the world. This, he posited, is not charity nor merely kindness—it is our responsibility if we are to be the good stewards of the world that God has created for all of us.

It seems safe to say that everyone present was buoyed by the Archbishop’s wisdom, humor and humility. Jubilee Oregon thanks Archbishop Tutu and his son, Ecumenical Ministries of Oregon, and all of the Congressional staffers and member congregation representatives who were present.

Obama should re-start immigration debate - and extend it beyond our borders

Check out Sarah Anderson of the Institute for Policy Studies' great post on The Hill's Congress Blog:

The news that President Obama plans to put immigration back into the political debate is very welcome. The economic crisis has made this issue even more urgent for two reasons:
1. The crisis has made many immigrant workers even more vulnerable to abuse.

Ai-jen Poo, of the National Alliance of Domestic Workers, points out that when 10,000 Wall Street jobs are lost, 10,000 domestic workers’ jobs are in jeopardy. Poo reports that workers who remain employed are facing escalating labor and other human rights abuses as employers take advantage of these workers, who tend to be immigrants and are isolated in individual homes. The National Day Laborer Organizing Network reports similar problems facing their constituents. Latinos working in the housing industry were among the earliest and hardest hit by the crisis.

2. The global impacts of the crisis are intensifying immigration pressures in developing countries.

The immigration debate needs to extend beyond domestic measures. Reducing poverty and joblessness abroad is the only real solution to immigration concerns in this country. President Obama should follow through on promises to promote debt cancellation for impoverished countries, one of the most effect ways to fight poverty. He should also see his plans to reform trade policies as an opportunity to repeal rules, such as the agriculture provisions in NAFTA, that have caused massive unemployment in the Mexican countryside.

Once migrants arrive in the United States, their basic human rights need to be protected. Given a choice, however, most people would prefer to stay in their home country. The Obama administration’s immigration plan should include initiatives to help create the opportunities that will give more people that choice.

Busy Busy Busy

These last few weeks have been a whirlwind for Jubilee: combating the financial crisis, trying to prevent a new debt crisis, working to make sure that the decision's of world leaders are just and fair. Last week's G20 Summit changed the game - world leaders committed to giving the International Monetary Fund $850 million in new money. This is the institution whose policies helped start the crisis and one that is definitely not fair and just. Saying that, we've been working hard to make sure that the new money is an opportunity for serious reform of the IMF and a chance to use the money to help the most impoverished.

To get our voices heard, grassroots from across the country have been writing letters to the editor in their local papers and a number of our staff and religious leaders have also placed articles and opinion pieces. It's hard to post them all in full, so I'll leave them here. Take a few moments; browse, get educated, get inspired.

• Neil Watkins, "G20 and Global Poverty," Foreign Policy in Focus, April 8, 2009.
• Dr. Michael Harrington, “Debt relief is vital for poor nations,” Letters to the Editor, Financial Times, April 7, 2009.
• Kelly Trout, “Improving the IMF's Impact,” Letters to the Editor, Washington Post, April 7, 2009.
• Robert Brown, “Remember world's poor,” Letters to the Editor, Washington Live, April 4, 2009.
• Richard Cizik, “Obama Must Not Forget His Promise to the World's Poor at G-20 Summit,” The Christian Post, April. 01 2009.
• Rev. Mark S. Hanson, “A Test of Moral Leadership for President Obama at G-20” Religious Dispatches, April 1, 2009
• Susan Beckett, “In poor countries, downturn is deadly,” Ann Arbor News, Letters to the Editor. March 30, 3009.
• Susan L. Beckett, “Worldwide relief,” Letter to the Editor, Detroit Free-Press, March 29, 2009.
• Sister Karen Ann Wielaba, “Obama should work to expand debt relief,” The Reading Eagle (Pa.), March 20, 2009.
• Kristin Sundell, “As Global Recession Drives More Women into Poverty, a Challenge to Obama,” Women’s Media Center, March 13, 2009.
• Margot Friedman, “The G-20 Summit: An Early Test for Obama,” Tikkun.org, March 12, 2009.
• Elizabeth Palmberg, “Earth to the G-20: ‘The Developing World is too Big to Fail’,” God’s Politics Blog (Sojourners), March 11, 2009.
• Linnea Nilsen Capshaw, "What the G-20 Can Do for Haiti," Washington Post, April 2, 2009.
• Harry Olmstead, "Economic Crisis a Global Issue," The Birmingham News, March 26 2009.

Voice from the South: Eco Justice in Nigeria

Last week Jubilee had the pleasure of meeting Leo Atakpu, Deputy Executive Director of the African Network for Environment & Economic Justice (ANEEJ) during Ecumenical Advocacy Days here in the DC area.

Leo gave us a moment of his time to speak on issues of climate change, ecological damage, and North-South Relations:

On the African Network for Environment and Economic Justice:
"The African Network for Environment and Economic Justice (ANEEJ) is a not-for-profit, non-political, non-governmental organization based in Benin City, Edo state, Nigeria, aiming at promoting sustainable development through research, policy dialogues, workshops and advocacy.  ANEEJ deals with development issues in their environmental and social economic aspects with emphasis on World Bank and IMF financing in African countries.  The goal of ANEEJ is to amplify the voice of the weak and the marginalized, in order to bring about their participation in democratic decision-making process."

On the World Bank’s lending policies:
"The World Bank has consistently supported questionable projects most of which were remain today as failed projects, which did not address poverty reduction that they ordinarily seek to tackle.  The three large dams in Nigeria built in the 50s and 60s-The Kainji, Shiroro and New Busa dams were funded by the bank and these dams have impacted negatively on the environment, displaced several thousands of people while the livelihoods of thousand others have been destroyed."

On the World Bank’s Pilot Program for Climate Resilience:
"The World Bank’s new program to give loans (and not grants) for adaptation for climate change in developing countries is a mere action to satisfy the desires of the drivers of neo-liberalism. It is immoral for developed countries that are largely responsible for carbon emissions not to take decisions that would provide grants to developing countries for adaptation purposes. We have consistently challenged the World Bank lending policies, procedures and communication strategies, which more often than not undermine the interest of the poor, weak and vulnerable groups in Nigeria."

On Nigeria’s ecological damage:
"The issues are clearly those of people’s socio-economic rights being constantly violated by the multi-national companies in active connivance of the state. People’s livelihoods, health and environment are jeopardized. There are innumerable cases of environmental pollution –land, air and water leading to loss of lives, destruction of aquatic lives, flora and fauna as well as land degradation.

Besides, there are governance issues, which has perpetrated the resource-curse phenomenon wherein oil resources do not benefit the host communities’ majority of whom wallow in abject poverty. . . The experience confronting these issues shows that governments down south are tied to the apron strings of multi-national oil companies and Northern governments who largely dictate our development models leading to crises of ownership of such development processes."

To learn more about these issues, visit Jubilee USA's page on Climate Change

Movies with a Message in Oregon: "Iron Ladies of Liberia"

By Pat Rumer, Jubilee Oregon

Jubilee OR joined with Portland Community College's annual African Film Festival to educate people about Vulture Funds and to ask them to take action.  Saturday, March 7, 2009 the African Film Festival showed "Iron Ladies of Liberia" - a really great film following President Ellen Johnson Sirleaf in her first year in office as president of Liberia.  There was some good discussion of Liberia's debt in the film.

Prior to the film's showing Pat Rumer talked about vulture funds - what they are and how they are impacting Liberia.  We asked the 200 people at the film to sign a letter to their Member of Congress asking them to co-sponsor the Stop Vulture Funds Act when it is re-introduced this year by Congresswoman Maxine Waters.  People were very enthusiastic and we garnered many signatures to send to the Oregon and SW Washington representatives as well as our two U.S. Senators in Oregon. 

International Film Festivals are a great way to reach new people with the message of Jubilee.  Do a google search to see if any theater or college in your town hosts such a film festival.  Partner with them - Jubilee OR has participated in panels after the film, Bamako as well as several other African films that relate to the debt crisis. 

We met several members of the Liberian community and are planning to do a joint workshop about vulture funds and debt with them.  Besides meeting new people and signing up people on our email listserv, the film was great!