[stop-imf] SIGN-ON Letter: G7 Finance Ministers in HalifaxJune 14-15

[Robert Weissman]

ORGANIZATIONAL sign-ons to <info@halifaxinitiative.org>

The following is a sign-on letter addressed to the Finance
Ministers of the Group of 7 major industrialized countries
(the U.S., Canada, the U.K., France, Italy, Japan and
Germany). It was initiatied by the Halifax Initiative, the
rough equivalent of the 50 Years Is Enough Network in
Canada. The Halifax Initiative was named for the long list
of studies and reforms the G7 heads of government pledged 
to
at the 1995 G7 Summit in Halifax, Nova Scotia, Canada.

Now that seven years have passed and Canada again holds 
the
chair of the G7, the regular pre-summit meeting of the
countries' Finance Ministers has been scheduled for June
14-15, in, of all places, Halifax. The letter thus reviews
some of the key pledges made in 1995, the failure to meet
them, and what can be done now to make real progress on
those goals.

Activists in all the G7 countries participated in drafting
the letter. In an effort to sharpen the sense that this is 
a
letter from constituents to their representatives 
demanding
accountability, we are asking that ORGANIZATIONS (no
individuals, please) from the G7 countries ONLY should 
sign
on.

Please send your ORGANIZATIONAL sign-ons to 
<info@halifaxinitiative.org>. Include location (city / 
state
or province / country) and a contact person.

Thanks

50 Years Is Enough Network




OPEN LETTER TO THE G-7 FINANCE MINISTERS

When the G7 heads of government met in Halifax in June 
1995,
leaders made a commitment to a series of measures to 
reform
the Bretton Woods Institutions. The G7 called for the
provision of multi-lateral debt relief for the poorest
countries, the promotion of environmentally sustainable
development and the reduction of poverty.

Seven years later, these promises are unfulfilled. The
crisis of legitimacy confronting the World Bank and the 
IMF
at the 50th anniversary of their creation led to the G7 to
take up the reform of the international financial
institutions (IFIs) in Halifax. As the G7 finance 
ministers
return to Halifax, this question of legitimacy continues 
to
haunt the institutions.

We address you as the practical powers governing the 
global
economic system. In doing so, we must assert that the G7 
is
not the appropriate mechanism to decide on the roles and
approaches of the International Financial Institutions. 
The
undemocratic systems and structures of the G7 and the IFIs
create a democratic deficit in global economic governance.
This deficit has been pointed out in many studies 
including
one from the United Nations University, New Roles for the 
UN
and the Bretton Woods Institutions (May 2001).We urge you 
to
begin the re-structuring necessary to create and preserve 
a
peaceful and equitable world.

The organizations signing this letter, all based in G7
countries, call on you, the G7 Finance Ministers, to make
fundamental changes in the IFIs and the governance of the
global economy. With increasing inequality, poverty,
environmental stress, and frustration with an unjust
distribution of power and opportunity, we believe we are
echoing an imperative being voiced with increasing urgency
around the world.

Debt

We will encourage: the Bretton Woods institutions to 
develop
a comprehensive approach to assist countries with
multilateral debt problems - 1995 G7 Communiqué

In 1996, one year after the Halifax Summit, the World Bank
and the IMF announced the Heavily Indebted Poor Country
(HIPC) Initiative, which was widely criticized for 
providing
too little debt relief, to too few countries, too slowly,
and with counter-productive conditions. In 1999, the G7
announced a reformed HIPC ( HIPC II) proposal at its 
summit
in Köln, ostensibly to provide speedier, deeper debt 
relief.
Yet, to date, only five countries have received the full
amount of debt relief offered by the World Bank and IMF
programme.

African countries alone spend US$15 billion each year
repaying debts. The level of relief being offered under 
HIPC
is far less than necessary to ensure stability, let alone
ignite economic growth. Only 23 countries have even
qualified for the programme and many of them are failing 
to
meet the onerous conditions attached to the debt relief
program. The HIPC Initiative is not working. The HIPC
Finance Ministers note this in their London Declaration of
March 2002. The World Bank and IMF's own report on the 
HIPC
Initiative, tabled at the Spring meetings, April 2002,
documents the deterioration of external debt levels. The
former Canadian Finance Minister, Paul Martin, has called
for a serious review of the HIPC Initiative. We believe 
that
you, the G7 Finance Ministers must agree to Mr. Martin's
proposal, but that you should also go further.

You, the Finance Ministers, should come forward with a new
recommendation in Halifax, calling for the comprehensive
cancellation of debt claimed by the IFIs of the most
impoverished countries.

While impoverished countries need immediate cancellation,
other developing countries also face difficulties with 
debt.
We need new approaches in international debt management 
that
strongly favour the prevention of debt crises and which
recognize the responsibility of all parties involved. An
international debt arbitration mechanism must have the
authority to assess and cancel illegitimate debts and not
just write down unpayable debts as does the HIPC 
mechanism.
Illegitimate debts include: debt that cannot be serviced
without causing harm to people or communities, odious 
debts
incurred to strengthen despotic regimes, debts contracted
for fraudulent purposes, debts whose proceeds were stolen
through corruption, debts for failed projects and debts 
that
became unpayable as a result of a creditor unilaterally
raising interest rates.

We urge you to call in Halifax for the multilateral
institutions to accept their share of responsibility for 
the
debt crisis and to write off the debt owed to them by the
poorest countries, as it is illegitimate.

We urge you to ensure that any debt arbitration mechanism 
is
independent of all creditors, including the IMF, is
statutory, and addresses the issue of illegitimacy.

Environmental Sustainability

We will work with the organizations and all their members 
to
ensure relevant multilateral institutions make sustainable
development a central goal of their olicies and 
programmes,
including by intensifying and deepening the integration of
environmental considerations into all aspects of their
programmes. - 1995 G7 Communiqué

We will encourage the World Bank Group to integrate more
effectively the activities of the International Finance
Corporation and the Multilateral Investment Guarantee 
Agency
into its country assistance strategies - 1995 G7 
Communiqué

The World Bank Group has failed to mainstream 
environmental
sustainability into IFI policy and operations. The private
sector lending arms in the Bank, especially MIGA, have
failed to commit to support projects that reduce poverty 
and
environmental degradation. The World Bank continues to
finance environmental disasters. The Operations and
Evaluation Department of the Bank, in its report Promoting
Environmental Sustainability in Development, confirms, 
"The
Bank has done little institutionally to promote, monitor, 
or
otherwise make mainstreaming happen."

In response to one of the gravest threats to our security,
climate change, the Bank continues to lend vastly more for
fossil fuels than renewables. The ratio of fossil fuel
funding to funding for clean, renewable sources of energy 
is
approximately 20 to 1. The Bank has even rejected calls to
set specific targets for support for renewables. Although 
it
supported the World Commission on Dams from its beginning,
the World Bank has explicitly refused to commit to its
recommendations. The newly launched Extractive Industries
Review appears also to be an exercise in managing rather
than addressing criticism, and the process's independence
from the Bank has been seriously compromised.

We urge you to call on the multilateral organizations to
take into account the environmental and social impacts of
all their programmes and to phase-out support for
destructive oil, gas, mining and dam projects.

Poverty

An overriding priority is to improve the plight of the
world's poor. Persistence of extreme poverty and
marginalization of the poorest countries is simply not
compatible with universal aspirations for prosperity and
security. Sub-Saharan Africa faces especially severe
challenges. - 1995 G7 Communiqué.

We encourage the IMF and the World Bank to concentrate on
their respective core concerns (broadly, macroeconomic
policy for the IMF and structural and sectoral policies 
for
the World Bank). - 1995 G7 Communiqué.

The IMF and the World Bank continue to undermine the quest
by impoverished peoples for sustainable and dignified 
lives.
The most obvious problem is the institutions' adherence to
specific economic and fiscal policies that have had
negligible or negative impacts on poverty.

Although the Structural Adjustment Participatory Review
Initiative, conducted jointly by governments, the Bank, 
and
civil society organizations in about ten countries, found
that the root causes of poverty include the impact of
governments' efforts to adhere to policies of trade and
investment liberalization, privatization and cutbacks in
government spending, there has been no change in lending
portfolio or decision-making processes of the World Bank 
and
the IMF.

Macroeconomic policy, which has an enormous impact, 
remains
outside of the Poverty Reduction Strategy processes: for 
all
the talk of participatory approaches to development, civil
society organizations are simply excluded from discussions
of the key policies. Recent studies on the PRS process in
different countries document problems with participation,
accountability and ownership.

Appropriate means of stimulating growth and stabilizing 
the
macroeconomic framework have been conspicuously absent 
from
PRSP discussions. The World Bank and the IMF, in their
report on the PRS process, urge PRSP countries to 
recognize
the primacy of the private sector for growth and the
desirability of trade openness, a strategy that many
observers feel is at best unproven.

The IMF undertook a "Streamlining Conditionality" review 
but
made no commitment to ensure that its core conditions do 
not
worsen poverty. Whereas the Bank and the Fund have adopted 
a
new "User Guide on Poverty and Social Impact
analysis"(PSIA), in response to NGO calls, it is neither a
minimum standard for staff, nor operational policy. The 
IMF
continues to condition stand-by arrangements and the
Enhanced HIPC programme on conditions such as 
privatization.
The Finance Ministers of HIPC countries made several
recommendations on this issue in their London Declaration,
March 2002, such as allowing for flexible approaches to
macro-economic stability and dramatically accelerating 
PSIA
that the G7 Finance Ministers should address.

We urge you to call on the World Bank and IMF to end
requirements for structural adjustment (programmes) or
conditions that have negative impacts on the poor and the
environment.

We urge you to call for the effective incorporation of
respect for human rights, including labour rights and 
other
social, economic and cultural rights as defined by 
accepted
United Nations guidelines, into the programs and 
conditions
of the international financial institutions.

Africa

Sub-Saharan Africa faces especially severe challenges. We
will work with others to encourage relevant multilateral
institutions to: focus concessional resources on the 
poorest
countries, especially those in Sub-Saharan Africa, which
have a demonstrated capacity and commitment to use them
effectively, [and] direct a substantially increased
proportion of their resources to basic social programmes 
and
other measures which attack the roots of poverty. - 1995 
G7
Communiqué.

While we applaud the priority given by the G7 governments 
to
an African-led economic plan for Africa, we are concerned
that donor pressure will continue to foreclose the
possibility of approaches that depart from the current
economic orthodoxy.

We call on the G7 Finance Ministers to pledge good-faith
support to an economic strategy designed by Africans,
including full consultation and cooperation with a broad
range of civil society organizations.

We further call on you to support African development with
comprehensive cancellation of the debt claimed by the 
World
Bank and the IMF in order to free resources for basic 
social
programmes and other measures which attack the roots of
poverty, an end to structural adjustment and similar
conditions, and support for diverse development paths
premised on a strategic rather than open integration into
the global economy.

Since the G7 last met in Halifax, promises to reform the
International Financial Institutions remain unfulfilled. 
As
a result, the global crisis of poverty, inequity and
environmental devastation has continued to worsen. 
Canceling
the debt, ending structural adjustment and integrating 
sound
sustainable approaches to the environment into development
are imperatives for addressing this crisis. On-going 
delays
to serious reform of the Bretton Woods Institutions are
scandalous in the face of G7 declarations promising help 
for
the poor and the environment.

Finally, if the institutions are to begin to reverse the
damage done to their legitimacy by their manifest 
failures,
the governance of the institutions must be changed to 
ensure
equitable participation and full transparency. Calls for
"good governance" from the IFIs or the G7 will continue to
be received as pure hypocrisy until the extreme power
imbalances at the root of our global economic system are
redressed.

Sincerely,



Please send your ORGANIZATIONAL sign-ons to 
<info@halifaxinitiative.org>. Include location (city / 
state
or province / country) and a contact person.

Thanks!!