The Jubilee Blog

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.