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make forceful intervention in UN debate on Financing for Development. Phedon Mwombeki criticised PRSPs and HIPC on behalf of the World Council of Churches. Ruth Cecil spoke on behalf of CSOs working on the Tobin Tax. The
New Economics Foundation in association with Jubilee Movement International called
on western governments to stop collecting debts and taking money from the poor,
and start giving 0.7% of their GDP to development in the poorest countries. Statement to Finance for Development Preparatory Committee:- New Economics Foundation in association with Jubilee Movement International Monday, 7th May, 2001. Heading V of the Facilitator’s working paper: Debt I want to begin by thanking you Mr. Co-chairman, and the Cttee, for the privilege of addressing this Prepcom on behalf of the caucus of NGOs present at this Conference. We want to make three points: First: that any debate about finance for development should address the transfer of funds from poor debtor nations, to much richer nations and institutions. Under the HIPC initiative, since the autumn of 1996, debt service reduction by the 41 HIPCs has amounted to no more than $1.1billion. (Source: World Bank/IMF HIPC documents). Over that same period the 41 HIPCs have transferred a total of $US 35 billion in unproductive debt service to much richer countries and financial institutions. These countries are repaying debts at a great cost to human life and development. In the meantime rich countries are enjoying levels of affluence unprecedented in human history. The World Bank is beginning to acknowledge that after 20 years of failed debt management, five years of the HIPC process, the poorest countries have not returned to sustainability. But there are many more countries with unsustainable levels of debt that are not under consideration by a process which is creditor-driven and creditor-controlled. The very first step in raising finance for development must be to free both so-called low-income and middle-income debtor nations to use their hard-earned export and tax revenues for productive social and infrastructure programmes. Second: we want to make clear that we regard the international financial system as profoundly unjust. International creditors and debtors are not subject to the discipline of bankruptcy and are often protected by the IMF from the wrath of market forces. This leads to moral hazard, to reckless and often corrupt lending and borrowing. Instead international creditors flout the very rule of law, by acting as witness, plaintiff, judge and jury in the courts of international finance – the Paris Club, the London Club, the IMF, and the World Bank – and by ruling on their own claims. Domestic bankruptcy procedures protect human rights, and prevent creditors using their collective power to punish and destroy the livelihoods of debtors. No such protection exists for sovereign debtors. We welcome the statement made today by the delegate from Indonesia, which called for an independent, fair and transparent process of arbitration between international creditors and sovereign debtors. We support the call of the Secretary General, in his Report to the Millennium Summit, for an independent, transparent process of mediation. We welcome the Iranian delegates call on behalf of the G77 that we "should consider provisions in the international sphere, similar to the USA bankruptcy code" for municipalities, and the need to develop more transparent mechanisms for working out debt problems. We welcome in particular UNCTAD's latest Trade and Development report, which calls for temporary standstills on debt payments during crisis situations, and the need for effective mandatory backing at the international level. We note that the Canadian government has proposed an Emergency Standstill Clause to be mandated by IMF members. That even IMF directors recognize that " it is not possible to reach agreement on a voluntary standstill (in a crisis), and member (countries) may find it necessary to impose one unilaterally". We call on this Committee to work closely with UNCTAD and other independent bodies to formulate concrete proposals for an independent, transparent and accountable process of arbitration - for tabling at the Mexico conference. Furthermore we call for the stronger involvement of civil society in any such process, aware that the most effective challenge to corruption is democratization, greater transparency and accountability in economic governance. One of the great strengths of domestic bankruptcy laws, as the example of Macy’s here in New York shows, is that they enable corporations to re-structure and re-build, and that, by restoring order and soundness to balance sheets, they attract new funds and investment. Debtor nations, released of phantom, illegitimate and unpayable debts, would be far more attractive to foreign investors. Our third point is one stressed particularly by northern NGOs at this conference: We have campaigned in our countries over the last five years for greater justice for the poorest nations, and for massive debt cancellation. To our surprise, and to the surprise of our governments, we have tapped massive public support for these campaigns. The people of Europe, the United States, Germany, Japan, Italy, the Nordic countries, Australia and New Zealand, do not, on the whole, want our governments to accept debt payments from the poorest countries, and we want an end to exploitation. We note that the 3-400 million people living in richest countries use two thirds of the world’s savings to finance their habit of living beyond their means, (i.e. to finance their trade deficits); while at the same time western governments show extreme reluctance to share the world’s resources with the 6 billion of the world's poor. The electorates in countries of the north are protesting and demonstrating against this greed and dangerous polarization of wealth. The people are leading, and the leaders must follow. We urge our governments to place on the table, before Mexico, concrete proposals for reversing transfers from poor to rich by giving debtor nations the right to debt payment standstills; and for substantially increasing transfers to the poorest countries. In particular we call for a collective agreement by OECD countries to raise ODA levels to at least 0.7% of GDP, and to implement such a commitment within the next two years. We know that with massive budget surpluses, and with electoral backing, such commitments are eminently affordable. We ask for these commitments to be in place by the 2002 Mexico conference. We call for this, not in the name of charity, but because we, and millions of others, want to live, and want our children to live in a more stable, more just, and more sustainable world. Thank you Mr. Co-chair. Ann Pettifor
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