Jubilee 2000 rebuts criticism from UK International Development Secretary Clare Short

 

Clare Short, Britain's International Development Secretary, criticised Jubilee 2000 campaigners when she addressed the General Synod of the Church of England on November 18.

“It is understandable that Clare Short wants to focus on aid projects and aid spending – that is her job,” said Ann Pettifor, director of the Jubilee 2000 Coalition. “But despite the impressive increases in aid that she has secured for her department, the fact is that developing countries pay out much more to their creditors every day in debt repayments than they receive in new grants. Most of the debt owed to Britain is actually the responsibility of the Chancellor, Gordon Brown, because 96 per cent of bilateral debt results from guaranteeing export credits and not from aid.”

“Clare Short cannot afford to take a narrow departmental view,” Ms Pettifor continued. “We strongly support her call to halve the proportion of people living in abject poverty by 2015. But she must realise that to meet such ambitious targets, major debt cancellation is absolutely necessary, as well as increased aid. In focusing only on aid, she is only telling half the story. This is not joined-up thinking.”

Clare Short said:

“The churches' campaign on debt relief has been admirable and powerful. But there is a real danger that good people will believe that debt relief is the `magic bullet' to end all poverty, and that debt is the cause of all poverty. This is untrue. ... The truth is important. Debt relief is part of the answer but not the whole answer. ... Debt relief should not go to all poor countries, it should support those committed to poverty eradication.”

Jubilee 2000 comments:

We agree. Jubilee 2000 has never claimed that debt cancellation is a “magic bullet”; indeed, Clare Short is the only person who has ever used the phrase in relation to debt cancellation. We have always argued that much deeper debt cancellation is necessary to end poverty, but that it is not sufficient. Good government, a commitment to poverty eradication, and more aid are needed as well.

Debt cancellation in itself will not end poverty, but it is equally certain that without real debt cancellation, Clare Short's own poverty reduction targets cannot possibly be achieved. This is the message that is becoming clear to governments and campaigners alike, from Honduras to Mozambique, and it explains the strength and breadth of the fast-growing international campaign.

Perhaps the clearest sign of Jubilee 2000's commitment to poverty reduction is that its members include the very aid agencies who are working to reduce poverty around the world. Oxfam, Christian Aid, Save the Children Fund, CAFOD, Tearfund, Action Aid and World Vision are among the Coalition members actively working on projects in developing countries. They have joined the campaign to cancel debt precisely because they see that it is essential for poverty reduction.

Clare Short said:

“I was extraordinarily heartened by the many thousands of people who came to lobby the G8 Summit in Birmingham. But debt relief alone will not produce the result they seek. Debt relief can be an essential step in ending poverty.”

Jubilee 2000 comments:

We agree that debt relief is essential. That is all we are asking for. It is a measurable, tangible, achievable goal that will reduce poverty and will promote justice at the start of the new millennium.

Clare Short said:

Mozambique is an example of hope ... “debt is a clear brake on the Mozambique government's anti-poverty programmes. And we strongly believe the world must release the brake. Next year Mozambique will get the biggest debt reduction yet under the current HIPC initiative - by almost a billion pounds. This will not solve all the problems. But it will help.”

Jubilee 2000 comments:

The case of Mozambique – the poorest country in the world – demonstrates exactly why we think the HIPC initiative is not enough. It will help, but not very much. Under HIPC the international community will only cancel that part of the debt Mozambique was already not paying. Mozambique's actual debt service payments will fall after HIPC by just $13 million per year. Of course, $13 million will help – but it amounts to only 50 pence ($0.80) per Mozambican. This will not release the brake. The government will still be spending more on debt servicing than it spends on health and education combined.

The World Bank estimates that Mozambique needs to spend an extra $90 million per year on health and education to meet Clare Short's target of halving the number of people living in abject poverty. Yet, aid to Mozambique is in decline. We welcome Britain's plans to increase aid - but would it not be more efficient and more just to reduce debt service payments as well?

Mozambique is an example of just how inadequate present levels of debt relief under HIPC are. Mozambique shows why much deeper debt relief is essential and why, without something close to total debt cancellation, Mozambique will never reach Clare Short's ambitious poverty reduction target.

Clare Short said:

Debt relief “should not be unconditional” and “we should not call for debt to be relieved if the result would be more spending on arms or palaces or corruption. We must link debt relief to poverty reduction. ... Development depends on good government in developing countries.

Jubilee 2000 comments:

We have never called for unconditional cancellation of debt. We are in favour of tough measures to ensure that any resources from debt relief are used in the interests of ordinary people in debtor countries – people who are only too aware of the need for basic health care, primary education and clean water. We are also very clear that these conditions should be agreed through democratic structures and popular networks in the debtor countries themselves, so that the needs of ordinary people come first. Lenders and donors can help – and Clare Short is doing this - by building partnerships with these networks to strengthen them and allow them to be truly representative. Uganda has shown that a poverty action fund, drawn up by government, parliament and civil society and supported by donors, can ensure that resources freed from debt relief can be channelled to where they are most needed. Several other countries have similar policies in place.

Good government is a vital issue in the alleviation of poverty, and Clare Short is right to give it high prominence. But we have allowed “good government” to be defined entirely by the bankers of the International Monetary Fund. In the name of “good government” they have imposed conditions which several United Nations agencies say have increased rather than decreased poverty. They say the IMF imposes “adjustment through contraction” which increases poverty and unemployment, and call instead for “adjustment through growth” which reduces poverty and increases employment. The only condition imposed by the British government in previous years is that poor countries accept IMF conditions, which economists in those countries and in the United Nations say are wrong and have increased poverty. This suggests that although it has acted with good intentions, Britain's track record – supporting the imposition of conditions over the objections of economists and civil society in the debtor country – has been less impressive. We believe it is for elected governments in poor countries – not for Britain – to openly and publicly make the choice between the United Nations development path and the IMF contraction path. Therefore, we call on Clare Short not to impose conditions from afar, but rather to seek conditions which empower elected parliaments and strengthen civil society.

Clare Short said:

“Poverty is not all the fault of evil western Bankers. Corrupt dictators, weak and craven governments hold back their people across the world.”

Jubilee 2000 comments:

Much of the debt is the fault of western bankers – though not all of it, and we have never claimed that. The fact is that British banks and the World Bank lent billions of dollars to corrupt dictators like Mobutu in Zaire, Moi in Kenya, Suharto in Indonesia, Banda in Malawi, Marcos in the Philippines and to apartheid South Africa, knowing the result would be more spending on the “arms or palaces or corruption” that Clare Short rightly deplores. Jubilee 2000 estimates that one-fifth of all poor country debt consists of loans given to corrupt and military dictators during the Cold War. Britain, as a lender itself and as a Board member of the World Bank, approved those loans, never insisting that they should be linked to poverty reduction. British exports credits were also given to corrupt dictators to spend on palaces. We say Britain and other lenders must stop asking the children of the Philippines or Somalia not to go to school, so that their governments can repay the loans Britain knowingly made to corrupt dictators.

Clare Short said:

Campaigners should not call for the write off of “odious debt”, such as that bequeathed by South Africa's apartheid rulers to the government headed by Nelson Mandela. “The ANC Government have decided for the sake of their country and its economic reputation that they are going to pay it. We should not be telling them this is odious and they should not pay it; we should be supporting their right to decide the best way to manage their country.”

Jubilee 2000 comments:

Archbishop Njongonkulu Ndungane of Cape Town personally responded in a letter to The Times on 25 November. He wrote: “Clare Short is wrong to suggest that South Africa's `odious debts' – those that have arisen as a result of previous governments' policies – are a matter only for the South African government. Taking South Africa's scarce resources away from reconstruction and development and placing them in the pockets of Western and domestic creditors who were willing to finance apartheid repression is a matter for the people of South Africa too. The Jubilee 2000 Campaign is a movement of ordinary South Africans in the Churches and wider society, challenging those international and domestic financial institutions that place pressure on our government to prioritise debt repayment over the reduction in poverty endured by millions of black South Africans.

“One of the first acts of the new South African government was to cancel the odious debts owed to us by Namibia. The Government did not do this at the request of the Namibians. Instead it acted unilaterally. We are simply asking South Africa's creditors to do the same in relation to odious debt.”

In a speech to Oxford University, 21 May, Clare Short herself spoke favourably of a sympathetic creditor attitude to odious debt: “In some cases, however, the change has been so radical, and the previous regime so corrupt, that special consideration and assistance may be required.”

Clare Short said:

Debt relief “is not better if it is unilateral.”

Jubilee 2000 comments:

We agree that the best and most effective debt cancellation is collective cancellation by the entire international community. But the G8 meeting in Birmingham in May showed that some of the leading industrialised countries are dragging their feet on debt cancellation. Norway has now announced that in order to put further pressure on the G8, it will unilaterally cancel all debt owed to Norway by the poorest countries; Norway stressed that this is a political step designed to push Britain and other G8 countries to agree much deeper debt cancellation. If Britain takes unilateral action, it adds further to the international moral pressure on the recalcitrant countries. The last British government arguably delayed the end of apartheid by refusing to impose sanctions, which were strengthened through a cascade of unilateral actions by individual countries. The new government in Britain has a chance to show a new political will and political commitment. It has already made a start. It unilaterally chose to reverse the decline in aid spending, while aid from other donor countries continues to fall. On debt reduction, too, it has taken unilateral action. Earlier year, when the international community failed to cover a funding gap in Mozambique's HIPC package, Britain stepped in with a unilateral contribution, and then pressured others to do the same. The strategy was right – after hard work by British officials, almost every other major lender followed suit, and the gap was filled.

Unilateral action by Britain is a lever for multilateral action by the rest. It works – and it is just the kind of action that is needed to break the current deadlock on debt.

Clare Short said:

“Some very poor countries are not heavily indebted because they struggled to pay their debts. If debt relief is our only answer, they get no help. And some countries that have had debt relief need further help”.

Jubilee 2000 comments:

Allowing a company or individual to go bankrupt and not pay their debts clearly penalizes those who have found a way to pay. Yet we accept that the larger social good is served by drawing a line under unpayable debt. The same is true with poor countries. Nothing is gained by keeping children in Mozambique out of school so Mozambique can repay its debt – just because some other countries have paid. It should also be remembered that virtually no very poor countries have repaid their debts – nearly all are heavily indebted and in need of debt relief.

Clare Short said:

Unilateral action for hurricane-ravaged Honduras and Nicaragua would make little difference, because the two countries owe little to Britain.

Jubilee 2000 comments:

Creditors should not demand any repayment of debt from these two desperately poor countries, now devastated by Hurricane Mitch. Britain acting on its own is not enough, but with other creditors acting on debts owed to them, the necessary relief will be forthcoming. With external debt consuming 50 per cent of the Nicaraguan government's budget and 80 per cent of the Honduran government's budget (1996 figures), reconstruction is impossible without action along these lines from all creditors.

As Clare Short says, Honduras and Nicaragua owe little to Britain. It would cost us virtually nothing to make a gesture which would resound around the world and pressure others to do the same. That really would make a difference.