New debt crisis on the horizon
NewsNotes, July-August 2009
Ten years ago, debt campaigners, particularly the Jubilee campaign, forced the world to focus on the unjust and overwhelming burden of debt being carried by many impoverished countries. Using the turn of the millennium as a year of jubilee, people of faith and good will around the world gave the debt crisis of the 1990s a human face and made its resolution a moral imperative. The debt crisis of the late 1990s was predominantly visible in Sub-Saharan Africa, although its grip included countries in Latin America, Asia and the Pacific as well.
Over a decade earlier, Latin America and the Philippines had been at the center of a debt crisis storm when activists like the Philippines’ Freedom from Debt Coalition and the international Debt Crisis Network had effectively engaged commercial and bilateral creditors in debate about proposed solutions.
Building on the educational and advocacy efforts of the 1980s, debt campaigners in the 1990s developed significant political will for debt cancellation, and creditors, including the International Monetary Fund and the World Bank, agreed to an evolving set of policies – ultimately the HIPC (highly indebted poor country) Initiative - that were to have made debt “sustainable” for the most impoverished, highly indebted countries.
Under the leadership of Jubilee South and their allies, a vigorous debate about debt continued long after bilateral and multilateral creditors considered the matter settled. Central to the dissatisfaction of campaigners were macroeconomic policy conditionalities attached to every debt cancellation proposal, as well as to new loans.
Ongoing efforts continued to increase the number of countries able to benefit from debt cancellation schemes; to preclude the destructive impact of vulture funds on vulnerable countries; to address the deep injustice of illegitimate debt; to recognize the reality of ecological debt; to make visible the systemic injustice that leads to repeated debt crises and to create just international structures for dealing with unjust, overwhelming or disputed debt obligations.
After nearly 30 years of struggle to end the debt bondage of impoverished countries, the current financial and economic meltdown is likely to cause yet another global debt crisis. Already made more vulnerable by food insecurity, wildly fluctuating energy prices, the impact of HIV, AIDS and other treatable diseases and ecological destruction, the poorest countries of the world are reeling from the current financial and economic crisis that began in the global North.
As governments gathered at the UN Conference on the Financial and Economic Crisis and Its Impact on Development (June 24-26), the global debt movement insisted that
- international financial institutions and global economic and financial governance must be democratic and accountable;
- measures to address the present crisis should not be financed through new lending;
- debt cancellation and repudiation of illegitimate debt are needed to free up resources for crisis responses;
- new mechanisms for the resolution of debt disputes should be established; and
- the UN must address the linkages between debt, trade and other issues and support the development of alternatives.
The UN Conference held in New York under the leadership of Maryknoll Father Miguel d’Escoto Brockman, president of the UN General Assembly, gave focus to three extremely important challenges inherent to a just and lasting response to the crash of the global economy. The first is the importance of defining and implementing solutions through a completely inclusive process, making the UN General Assembly, where all nations have voice and vote – rather than the G8 or the G20 - the appropriate venue for addressing the crisis. The second is recognizing that deep transformation of the global economy itself is necessary. The third is that, as Fr. d’Escoto said in his opening address, “We must collectively adopt a set of decisions that, as far as possible, meet the needs of all,” which included the great community of all nations and its shared home, Mother Earth.
Faith in action:
Contact Jubilee USA about ongoing educational and advocacy efforts for debt cancellation.