Women's Views on Health, Peace and Development
July 2000
Banner photo: ©SEKAI BUNKA PHOTO
Debt Cancellation: A Moral and Economic Imperative
Demonstration for debt cancellation in London (April 2000)
[Lou Sirvent/Jubilee 2000]
Jubilee 2000 is a global campaign to cancel the unpayable debts of the world's poorest countries by the end of the year 2000. By January 2000, Jubilee 2000 had collected more than 18 million petition signatures from 120 countries, and established campaigning groups in over 60 countries worldwide.
The UN estimates that if funds for debt repayment were diverted back into health and education, the lives of seven million children a year could be saved. Jubilee 2000 has identified 52 of the poorest countries in the world as being in urgent need of debt cancellation. These countries, of which 37 are in Africa, owe a total of US $376 billion.
The main response of the international community is the Heavily Indebted Poor Countries (HIPC) initiative, but so far under HIPC, in four years only US $13 billion of debt stock has actually been canceled.
Jubilee 2000 has estimated that it would actually cost US $71 billion to cancel all the debts owed by 52 of the poorest countries--only one third of one percent of the annual income of the richest (OECD) countries.
The SGI Quarterly recently interviewed Prof. Jeffrey Sachs, an economic advisor to the Jubilee 2000 campaign.
SGI Quarterly: How did you become involved with the Jubilee 2000 campaign?
Jeffrey Sachs: I've felt since the mid-1980s that the world needed a completely new approach to the debt crisis of the poorest countries including debt forgiveness. So in the late 1980s I helped countries negotiate restructuring and reduction of their debt burden. It was a natural linkage for me when Jubilee 2000 became far and away the most important, effective and persuasive global voice for the cause of debt cancellation for the poorest countries.
SGIQ: The Jubilee 2000 campaign may make ethical sense, but does it make economic sense?
JS: Jubilee 2000 has taken a very honest look at the poorest countries, and it has recognized the simple fact that these countries are in such desperate condition that the burden of debt imposes a fundamental barrier on further economic progress and that it will continue to do so until it is substantially or in some cases completely taken off the backs of these countries. What we've had among the so-called technically sophisticated creditor community is dissimulation and pretense rather than honest economic analysis. The IMF, the World Bank and especially the most wealthy donor countries have pretended against all the economic evidence that these countries can somehow achieve economic development, meet the basic needs of their people and at the same time service a substantial proportion of the debt. What we've seen, though, is a failure of that strategy year after year, as the poorest countries are not able to make economic progress
SGIQ: Lenders seem to have gone some way toward canceling some debt with the HIPC and HIPC II initiatives. Are these working? Are these enough?
JS: Basically, it's too little and too slow, as it has been for 15 years, almost like a drip torture. Fifteen years ago it was obvious that these countries couldn't pay the debt, but it wasn't acknowledged. Bit by bit, the burden has begun to be eased. In 1996 the creditor countries launched the so-called HIPC initiative, and then three years later, almost nothing had worked, and they launched the enhanced HIPC initiative at the Cologne summit in the summer of 1999. Many of us said at that point, "It's still too little and too slow." Early this year a couple of countries achieved a bit of relief--Uganda has received some, as have Mozambique and Bolivia. But there are 42 countries on the HIPC list. The vast majority have gotten no relief whatsoever, and the amount of relief that they are achieving is perhaps half of what they need.
SGIQ: How about the need for reform of the International Monetary Fund (IMF) and the World Bank?
JS: The IMF is basically a mouthpiece for the rich countries. Rich countries are too stingy in the amount of aid they give, and the IMF is in there to defend the position of the rich countries. This is very regrettable because the IMF and the World Bank as professional institutions are greatly weakened by their willingness to be used by the rich countries to hide the insufficiency of aid coming from them.
SGIQ: Are there any independent bodies that can monitor aid issues and have any real teeth at the same time?
JS: I think the international Jubilee 2000 movement is enormously important in helping to keep the G7 governments and the IMF and the World Bank more honest. The G7 countries ought to be ashamed of themselves for not helping more when these poorest countries are in such desperate condition and millions of people are literally dying because they can't get access to vital medical needs. Budgets for public health are completely decimated, and the burden of debt service is many times higher than spending on public health.
Demonstration in Kenya
[Jubilee 2000]
Jubilee 2000 has helped very much to hold these basic truths in front of world public opinion, and it's forced the G7 to move.
Of course I also think that there ought to be reform of the IMF and the World Bank. The IMF has no business being in development activities in general. It should be doing its core function which is short-term lending for financial emergencies, not acting as the guiding force of African development for the last 20 years--a guiding force which has failed.
The money that the IMF currently gives would be much better channeled through the WHO, UNICEF, the World Bank or other agencies.
SGIQ: I understand that in some countries like Uganda there are local mechanisms to ensure that future loans following debt cancellation will be more responsibly used, that there is a civil society monitoring mechanism in place.
JS: Most of these poorest countries are not creditworthy, period. Even if their debts were canceled, it would behoove the world community to help them through grants rather than through loans because we don't really want to build up new debts. We need to give these countries money. Whatever way the money is given, though, it's got to be used effectively and that requires community involvement. For instance, local communities have played a major role in ensuring that healthcare facilities at the local level are functioning, that the money isn't being siphoned off in the national capital, that local community action, say, to control mosquitos is undertaken in conjunction with international aid which provides medicine. There needs to be social involvement from the grass roots.
The state of democracy in a given country is also an important issue. If we're going to provide assistance to a country where democracy is threatened, then we should do it through grassroots efforts rather than through loans to the government. We're past the Cold War where our governments were sometimes supporting corrupt leaders for the sake of geopolitics.
SGIQ: How do you think the momentum can be sustained beyond the year 2000?
JS: I am hoping that a real breakthrough can happen at the Okinawa summit, and I call upon the Japanese government as host to make this a historic summit at which this issue is finally solved. We have been working on this issue for nearly 20 years, and it is really disgraceful that the international community has not been able to mobilize the political will to truly solve this problem. So I think it's very important to do this in the year 2000.
Demonstration in Cologne [Mike Webb/Jubilee 2000]
It has to be understood that for the countries we're talking about, this is a matter of life and death. We're not talking about countries for whom debt repayment is merely an inconvenience. We're talking about countries in which debt repayment is so crippling that it leaves no money available to meet urgent medical needs of populations facing terrible burdens of disease. I think that the ethical as well as economic logic in that circumstance is to recognize the urgency of the case--to understand that it would simply be unconscionable to demand repayment at the expense of the very lives of the people that we're trying to help.
Jeffrey Sachs is director of the Center for International Development at Harvard University and Galen L. Stone Professor of International Trade. He is an economic adviser to Jubilee 2000.
