Ten questions about
Jubilee 2000

 Jubilee 2000 Coalition

 

1. What is Jubilee 2000?

A global campaign to cancel the unpayable debts of the world's poorest countries by the end of 2000. By December 2000, Jubilee 2000 had collected more than 24 million petition signatures from 169 countries, and established campaigning groups in over 60 countries worldwide.

In Britain, Jubilee 2000 is a coalition of 100 organisations, covering every section of society. Members include the National Black Alliance, Oxfam, Comic Relief, the National Union of Students, Christian Aid, Friends of the Earth, War Child, the British Medical Association and the National Assembly Against Racism, as well as all major religious denominations and aid agencies. Coalitions have been set up in other countries in a similar way. Key international champions include Desmond Tutu, the Dalai Lama, Bono and Muhammad Ali, while Kofi Annan, Tony Blair, Bill Clinton and Nelson Mandela have all made supportive statements.

See also: Who We are

2. Why cancel debt?

Because debt kills. Debt repayments divert money away from basic life-saving health care in the world's poorest countries. The UN estimates that if funds were diverted back into health and education from debt repayment, the lives of seven million children a year could be saved. That is 134,000 children a week. Jubilee 2000 says debts which kill should be cancelled.

Because for every pound we send in grants to developing countries, thirteen pounds come back in debt repayments. Even the poorest, most indebted group of countries pay out more than they receive: $1.14 in debt payments for every $1 in grants. The rich north is taking wealth from the poorest countries of Africa and Latin America. The only way these countries can service the debt is to take on new loans to help pay off the old ones. And even then, they normally cannot afford to make repayments in full - so they go into arrears and the debt gets bigger still. Jubilee 2000 says the best way to help these countries is to stop taking their money.

Because whoever is to blame for the huge build-up of debt, the only people who suffer as a result are the poorest people in the world. Some of the money got spent badly. Some was wasted. Some went into the pockets of dictators. Some went straight back to the West through corrupt lending. Some simply acted as a subsidy to Western companies. Very little of it actually helped ordinary people. But it is ordinary people who suffer now because of the debt - people who were probably not even born when the loans were made.

Because history shows that the right kind of debt cancellation is good for everyone. Germany received massive debt relief after the Second World War. The Allies realised it made sense - rebuilding a stable Germany meant peace and prosperity in Europe. It also meant Germans had enough money to buy American, British and Japanese goods. The levels of debt that were agreed as affordable for Germany are levels that today's post-war countries in Africa - like Mozambique, Angola and Rwanda - can only dream of.

3. What does "unpayable debt" mean?

Cancelling unpayable debt means getting debt down to a level where payments can be made, without an unacceptable cost in human terms. In aggregate, the 52 Jubilee 2000 countries combined pay the same amount in debt service as they spend on health and education combined. These debts are clearly unpayable. In reality, for the very poorest countries, cancelling unpayable debt will probably mean cancelling all debt. For others, only a portion will need to be cancelled.

4. How much is the debt and who is it owed to?

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 $376 billion. About half of this is owed directly to individual governments - mainly Japan, the US, Britain, Canada, France, Germany and Italy - the "G7". Most of the rest is `multilateral' debt - owed to the World Bank and the International Monetary Fund, which are effectively run by the G7 governments. Only about ten per cent is owed to private banks.

The G7 have the power to cancel the debts for these countries, and to ensure that their decisions are effectively implemented by the World Bank and IMF.

5. Why hasn't this been tackled before?

Various efforts have been made to deal with the debt burden since the 1980s. These have made little impact on the poorest people and until recently they only rescheduled debt payments to a later date, rather than actually cancelling them.

The main initiative of the international community is the Heavily Indebted Poor Countries (HIPC) Initiative. This does provide a useful framework, however in order to qualify for debt relief, countries have to consistently meet rigorous economic criteria over a number of years. This is rather like asking a patient on the critical list to sprint around the hospital in order to qualify for his life-saving operation.

Of the 52 countries that Jubilee 2000 has identified as being in dire need of debt cancellation, only 41 qualify for consideration under HIPC. So countries such as Nigeria and Haiti, which are desperately poor, have no hope of any cancellation.

To really have a significant impact, the HIPC process must provide more debt cancellation for more countries, and must deliver the relief over a much shorter time-frame than at present. However, in the long term, a process controlled by creditors who have vested interests can never be fair and transparent. Jubilee 2000 calls for a new process for debt cancellation, and future borrowing and lending (see question 7).

6. How much has already been cancelled, and how much more is needed ?

At the Cologne G8 summit in June 1999, the world leaders promised $100 billion of debt relief. An impressive figure, but actually, lending governments already know they are not going to receive most of this $100 billion back and have made provisions to cover their losses. So although this is a good start, in many countries it will have no significant impact on their payments - it is cost-free, and also benefit-free. If the debt being cancelled is debt that could never have been paid anyway, this will have little impact on the repayments for poor countries.

So far only $12 billion of this $100 billion has actually been cancelled. By the end of 2000, only some 20 out of the eligible 41 countries will have benefited from HIPC. They will have received a cut in debt service payments of around 35% on average.

Jubilee 2000 has estimated that it would actually cost $ 71 billion to cancel all the debts owed by 52 of the poorest countries (which have a face value of $376 billion). This is the real cost of debt cancellation - only one third of one percent of the annual income of the richest (OECD) countries. Over 20 years, this would cost each person in those countries less than $4 a year — which is less than 1p a day.

See also:

 

7. How can we be sure that this will help the poorest people and not be taken by corrupt leaders?

Jubilee 2000 is quite clear that any new resources released by cancelling debt need to benefit ordinary people, not elites. The best ways to attack corruption are to reduce poverty and to increase openness and transparency.

Jubilee 2000 wants to see decisions about spending priorities in developing countries made in partnership with people, represented by civil society and elected representatives of people's groups. These groups can work to monitor governments and officials and expose corruption, and ensure that funds diverted from debt repayment are spent effectively on improving health care and education. This process would open up third world governments and help foster democracy and respect for human rights.

In 1999, the World Bank and IMF introduced a requirement for countries in the HIPC process to write 'Poverty Reduction Strategy Papers' (PRSPs), setting out how funds released by debt relief would be used to tackle poverty, and to consult civil society over these plans. The link between debt cancellation and poverty reduction is paramount, but Jubilee 2000 also warned of the danger of PRSPs being used as yet another reason to delay debt relief. The process of consultation between governments, NGOs, unions, local community groups etc., can take place in tandem with the incremental delivery of debt relief, which is needed to provide funds to carry out the PRSP.

The IMF and the World Bank need to play their part in reducing corruption. These institutions and the West have a long history of funding for dictators like Mobutu, who received IMF loans long after clear evidence that he was siphoning money into Swiss Bank accounts. They too must open up their own processes to scrutiny and transparency.

It is not beyond the combined capability of the international community to find effective ways to ensure that funds are spent on the urgent needs of ordinary people, without imposing unnecessary conditions on countries from outside. What is lacking is the political will to cancel unpayable debts in the first place - and corruption must not be used as an excuse to do nothing.

Cancelling debt will itself be a blow against corruption, as the comfortable relationship between lending elites and borrowing elites is broken down. And of course, poverty breeds corruption. By tackling debt, one of the principle causes of poverty will be removed.

Jubilee 2000 is proposing a new process for international lending and borrowing to ensure that there is more responsibility and discipline on the part creditors and debtors. International arbitration, under the auspices of a body such as the United Nations would prevent both reckless borrowing and reckless lending.

8. How does crisis compare with the financial crises that took place in South East Asia?

Financial crises in South East Asia and the third world debt crisis share one thing in common - bad lending decisions. However, the reactions of the international community to the two are quite different. While poor African countries are allowed to dwindle under the burden of debt, richer South East Asian economies are quickly bailed out. The reasons are twofold. First, South East Asian economies are much bigger markets for western exports. Second, the amounts of money they owe are far greater. If South East Asian economies default on their payments, it threatens the stability of western financial markets. Nobody bothers to find any quick solution to poor country debt because no export markets are at stake and no financial stability is at stake - only the lives of the poorest.

The crisis in South East Asia did encourage debate about restructuring the international financial architecture. Jubilee 2000 is lobbying to ensure that this restructuring takes into account the special needs of the poorest, by cancelling the debts and taking measures to ensure new debts do not build up.

9. What have been the highlights of the campaign so far?

10. What is the campaign planning next?

Jubilee 2000 closes at the end of 2000, but the campaign for an end to the debt crisis will continue.

"There is no greater power on earth than an idea whose time has come"
Victor Hugo


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