Italian parliament poised to break debt deadlock

The Italian Parliament is currently examining legislation, which if approved in the next two weeks, could blow apart the consensus among creditor nations currently blocking debt cancellation.

Proposals in the Italian legislation are significant for three reasons. First, Italy is looking to cancel all debts owed her by 78 poor countries - known as IDA countries -not just the 41 defined by the IMF and World Bank as “Heavily Indebted Poor Countries” (HIPC). Campaigners have been strongly critical of the criteria drawn up to assess HIPC countries as they fail to take into account poverty indicators in many other indebted nations; nor do they take account of illegal and 'odious' debts.

The legislation being debated may also allow Italy to de-link debt cancellation from tough IMF austerity conditions, central to the HIPC initiative. These conditions have caused indebted nations to stumble at IMF “hurdles and hoops” and slowed the debt cancellation to a near halt. By de-linking debt cancellation from IMF conditions, Italy's approach offers a major breakthrough . IMF conditions have been rigidly imposed since the emergence of the debt crisis in the 1980s, despite widespread resistance in indebted nations. The Italian legislation specifically permits the Italian Government to follow different processes and timings from those agreed at international level.

Thirdly, the legislation requires the Italian government to seek the judgement of the International Court of Justice on the impact of debt repayments, the conditions under which debts are paid, and the monitoring needed for debt cancellation. Italian debt campaigners claim that this could be the first step towards the establishment of an international arbitration mechanism on debt which Jubilee 2000 has proposed as integral to a long-lasting solution to the debt crisis.

The legislation considered by the Italian parliament is the result of intense campaigning work in Italy. Jubilee 2000/Sdebitarsi has been hard at work, and active since 1998, and has been boosted in the last year, especially when world famous music stars and campaigners visited the Pope on 23^rd September 1999, 100 days to the millennium. In February this year, the San Remo music festival made Jubilee 2000 a household name in Italy as Bono, Sting, Youssou N,Dour, Luciano Pavarotti and above all Italy's own Jovanotti sang at the festival and called upon the Italian Prime Minister to do more to cancel the debts owed to Italy by the poorest nations.

Campaigners in Italy welcomed the new legislation, but have warned that pressure has to be sustained on the Italian Government to ensure the legislation in its present form is not modified. Clarifications are still needed on how and when countries will get their debts cancelled, and on whether Nigeria will be included on the list of eligible countries.

Luce de Fraia, Co-ordinator of Sdebitarsi said: "This legislation is the direct result of pressure by Jubilee 2000 at national and international level. Over the next three years, the Italian Government will be obliged to go through a process which could potentially result in the cancellation of Lira 12 trillion lire ($6 billion)of debt."

He warned however that the Government now had the responsibility for fully implementing this – and doing so as soon as possible. "We will continue to put pressure until this legislation is fully enacted. If this happens, it would be an important international breakthrough."

Certainly, a lead taken by Italy will have international repercussions as the Italian government takes over the hosting of next year's G8 Summit from Japan. If the legislation is voted through before the G8 Summit on 21^st July in Okinawa, then Jubilee 2000 will press for similar visionary steps from other nations at the Summit. If the G8 leaders fail to deliver at Okinawa, Italy's new law could lead the way for a bold new deal on debt cancellation at September's Millennium Summit of the United Nations in New York.

 

• Italian Parliament Ponders Gritty Details of Debt Relief' - Article from the International Herald Tribune, 27th June