Nordic Debt Seminar, Uppsala, 22th to 23th of October 1998

 

Brief report and reflections on follow-up by Hans Morten Haugen, Senior Executive Officer in Church of Norway Council on Ecumenical and International Relations, responsible for the Debt and Development group in Forum for Environment and Development and of the Norwegian Campaign to Cancel Third World Debt.

The meeting was convened as a joint Nordic meeting on preparations for the forthcoming Jubilee 2000 arrangements, especially the international coordination in Rome 15th to 17th of November, but also other events, like the G8 meeting in Köln, 18th to 20th of June next year. This was not the first Nordic coordination on the debt issue, as there has been meetings at least every year between the most active persons in the various campaigns. However, this was the first meeting between the Jubilee 2000 Campaigns in the four countries.

There was a seminar in Denmark the following weekend, 24th and 25th, with participation from the English Campaign. This seminar seems to have caused increased awareness, and the potentials for growth in supporting organisations for the campaign is significant.

In the other three countries there are at the moment approximately 40 organisations joining in each of the national campaigns. The economic foundation seems to be stronger in Sweden,

Denmark, which seems to have temporarily the most fragile and they also have the most professional staff at the moment. The other countries will depend upon Sweden to a great deal in this work. The strong factor of Sweden is already mentioned, and the local seminars are also of great importance in gaining wide support of the issue at stake. In Finland the campaign is newly set up, and they also have some parallel church coordination around the Millennium which also gives impetus to the campaign work. The Finnish campaign has managed to make the Finnish government express its support to the so-called “Jubilee 2000 project”.

Also the Norwegian government has made strong efforts to push the issue of debt, and has said that «in principle, we support the idea of Jubilee 2000 one hundred per cent». The fact that the Norwegian government has launched its Debt Plan, also with an internationally large attention, has made some people believe that this issue is not as important anymore. The challenge of raising the focus from the national debt strategies to the international ones, is indeed a big challenge.

However, it is a positive will in the churches of raising this issue, and the relations with the government are good. One must understand that the Norwegian Jubilee 2000 campaign is not to confront the government, but rather to gain support for the increased efforts globally. The weakest element of the Norwegian Campaign is the non-existing participation from the trade unions.

Jubilee 2000 globally

The Jubilee 2000 Campaign is now launched in more than 40 countries. There are almost as double as many in South than in North, and in accordance with this, it is important that the influence from Southern campaigns is increased. The global coalition will undoubtedly continue with internal debates on strategies and priorities. Many of the Southern campaigns are discontent with the too narrow focus in the Jubilee 2000 campaign. These claim that other structural factors should be included as well. The Nordic campaigns have chosen to have a concrete focus, but this does not imply that we ignore the other factors in our other work.

There are at the moment four elements of the common «jubilee 2000 constitution».

These are:

(1) Cancellation of the unpayable debt

(2) of the poorest countries

(3) in a fair and transparent process

(4) in the year 2000.

The fifth element that was included previously, a one-off cancellation, is not mentioned anymore. This might be understood as a way of answering those that criticized the previous aims of being difficult to operationalize. Keeping in mind that this task will be an enormous one, we must at the same time,recall all those ideas that have come up on how this aim could be achieved. Maybe the simplest one would be to convert all loans into grants. Another «technique» that has been mentioned, is just to consider the value of commercial debt at the second-hand market, currently at 14 to 20 per cent. If this value of public debt is then estimated at 10 per cent, there would be reasons for arguing that this could lead to a common action of reducing the debt by just eliminating the last digit.

In Norway there has been some concern on the concept «unpayable». The Norwegian Campaign for Cancellation of Third World Debt is not satisfied with this concept, and also people in the Norwegian Ministry for Foreign Affairs have expressed their astonishment that this is what we ask for.

They seem to understand that the «unpayable» concept more or less is equal to the aims inherent in the HIPC initiative. The Norwegian Campaign, now coordinating Jubilee 2000 activities in Norway, building on our past experiences, firmly believe that debt older than 3-5 years should be cancelled. The precondition for this must be that the debt servicing significantly lowers investments in social and productive sector, and that reduced debt servicing will be instrumental in increased investments in these sectors.

At the same time the concept «sustainable» is easier to understand for ordinary people than «unpayable». The Norwegian Campaign has for a long time argued that the sustainability concept used today is too narrow in scope, and both the social and the ecological dimensions of this concepts should be better integrated. Based on the above-mentioned arguments, the concept «non-sustainable debt» has been chosen initially by the Norwegian campaign.

Technicalities and political dimensions in the Jubilee 2000 movements. The Uppsala meeting, which could be viewed as a preparation for the Rome meeting in the middle of November, agreed that the most important aspect of the Rome meeting actually was that this was a unique opportunity of showing the strengths in the global Jubilee 2000 Coalition. The attention will might cause, will be important for the national campaigns. Therefore the Uppsala meeting was somehow reluctant to discuss to intensively on the various political aspects, but more agreeing that our aim must be to build bridges between the various Campaigns.

However, there will be discussions on the economical and political issues at the Rome meeting. The German proposal for an insolvency procedure is one of these issues. Simply said, this is a proposal that countries that are not able to pay its debt, should declare themselves unable to serve their debt, and that the responsibility then should be with the creditors to solve this issue. This is ordinary proceedings in all other economic transactions, and until now it is only states that cannot be declared bankrupt.

The insolvency is as follows: Debtor countries must talk via a mediation body to its creditors to cone to an agreement on which debt that most likely would never be served, and therefore should be written off. The problem with this proposal is that it will take too long to come to an agreement on the formalities on this insolvency procedure and how the mediation board should be formed and function - also in relation to other international coordinating institutions, like the Paris Club. The positive aspects is that the wrongful assessment of poor countries’ obligations to pay back everything, and the creditors’ lack of responsibilities, are both challenged.

Other issues will of course be the HIPC proposal (Highly Indebted Poor Countries), both isolated and seen in relation to the SAP conditions. The inherent understanding that countries should qualify for HIPC by keeping strictly to fulfillment of SAP, as a test of the country’s economic viability. Criticism of the HIPC has been raised, also due to the slow process in the HIPC mechanisms. Some have argued strongly for a HIPC II, but this seems a bit early as the HIPC I is moving too slowly.

The British proposals for Mauritius terms aims at guaranteeing that a certain number of countries will be passing the completion point at the year 2000. The Norwegian Campaign has expressed its support of the HIPC initiative, but remains negative on the fact that economic indicators, more than basic need indicators are determinants. There will undoubtedly be a negative aspect of the future Jubilee 2000 work if the work is used in too large extent to raise general criticisms on the policies of the World Bank and the IMF. Also voicing the other structural factors of the world economy will be relevant only to the extent that it is combined with the explanations of increased debt burdens. This is not an attempt of limiting the scope, but rather to argue that we should not let this opportunity drift away from us.

The future work - how to avoid a new debt crisis

On the annual meeting of the IMF in October, the issue of credit regulations was addressed. Also at a OECD conference in September the issue of regulations of foreign exchange transfers was touched upon. The issue of creating an «Economic Security Council» under the auspices of the UN, has been mentioned as one option of introducing some justice to the global system. Rather than pushing for such an institution, with a ten years job before anything significant will come out, I would argue for an international equivalent to credit monitoring and auditing boards.

This could serve as an important tool for avoiding tragic outcomes of increased debt burdens on the poor. The last years we have seen an increased tendency that public guarantees of private investments and speculations, ultimately will lead to a situation where those involved in risk capital will destroy the social fabric of society, as private losses lead to government responsibility and budget deficits. Private investments should to a much larger extent delink from public subsidies, grants and investments. However, funds for productive investments and enhanced production in countries in the South should be set aside, both by companies and by governments in the North.

Attempts of establishing procedures for greater accountability and transparency in countries in the South should also be actively supported. Procedures for holding more institutions informed about economical priorities has for a long time been criticized by trade unions, churches and other segments in the civil sector. The Ugandan proposal that the Parliament should be informed and could veto a decision of the government on any further loans, is important. This will lead to increased democratisation of the economic policy in a given country. By this, the economic responsibility will also be strengthened.

However, first the countries must have the opportunities for a new start as we enter the third millenium. The rich countries of the North have the means or moral obligations to make the vision of the Jubilee come true. We are many who expect it to happen!

Oslo, 5th of November 1998
Hans Morten Haugen