[stop-imf] Report from Today's Action: 10 Days to Debt Decision Day!

[robert weissman]

From: Neil Watkins <neil@jubileeusa.org>

Greetings, Jubilee supporters!

>From now until October 1, we'll send an update each day with the latest br=
eaking news, a new reason why you should join us at our action at the G7 Fi=
nance Ministers meeting on October 1, and reports from our partners and our=
 own actions.

In today's update:
1) Report from today's picket at US Treasury -- with photos!
2) Reason #10 why you should JOIN US on October 1st at noon at our next
action
3) News article: The East African (Nairobi, Kenya) editorial on the
proposal for 100% debt cancellation

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1) Report from today's picket at US Treasury -- with photos!

See photos from today's demo at:
www.jubileeusa.org

Jubilee USA Holds Picket At US Treasury Dept, Sets October 1 Deadline
for Action on Debt

Letters to Bush Administration Calling for Full Debt Cancellation from
Congress, Catholic Bishops, Health Professionals Released At Event

WASHINGTON -  Dozens of students, people of faith, and community
organizers from the Washington, DC area held a picket and rally at the
US Treasury Department today, and called on the Bush administration to
work within the G-7 to announce a commitment to 100% multilateral debt
cancellation for poor nations at the upcoming October 1st G-7 Finance
Ministers meeting in Washington.

The action was held ten days before this critical meeting and the Annual
Meetings of the IMF/World Bank. Jubilee USA Network is very encouraged
by reports in the Washington Post and elsewhere that US Treasury
apparently supports full multilateral debt cancellation for 30
countries. Participants urged Treasury to continue to push its proposal
forward, while calling on the administration to extend cancellation to
all impoverished countries, and without harmful conditions. President
Bush addressed efforts to cancel impoverished country debt in his
address to the United Nations this morning, though he did not announce a
new policy during this session.

=93We are counting down to freedom from debt,=94 said Marie Clarke, Nationa=
l
Coordinator of Jubilee USA Network, at the event today. =93Each day 8,000
people die due to HIV/AIDS while impoverished nations pay billions in
illegitimate debt payments to wealthy institutions like the IMF and
World Bank. We are encouraged by US Treasury=92s apparent support for full
multilateral debt cancellation, but time is running out. We need action,
not more words, on October 1st when G-7 Finance Ministers meet.=94

Several letters calling on the Bush administration to support full debt
cancellation for impoverished nations from Members of Congress, the US
Catholic Conference of Bishops, and nearly 150 health professionals were
announced or released at the event. The letters are available upon request.

The letter from 32 Members of the US Congress, called on the
administration to =93take the opportunity presented by the October World
Bank and IMF meetings to advocate the complete cancellation of the debt
of all severely indebted poor countries...=94 The letter continued, =93We
believe cancellation of all multilateral debt is affordable,
particularly if we look at some further revaluation of IMF gold holdings
=96 but the world can hardly afford not to cancel these debts.=94 A letter
from Senators in support of full debt cancellation was sent to the
administration ten days ago. The letters are available upon request.

The event is part of Jubilee USA Network=92s =93Countdown to Freedom from
Debt campaign=94 to pressure the US government to support 100% debt
cancellation for impoverished nations. In the past six months, Jubilee
and its more than 70 Network member organizations have sent more than
600 faxes to US Treasury, delivered 11, 000 cards to the World Bank and
IMF, delivered a letter from more 250 prominent religious leaders to the
G7,  worked to introduce bi-partisan legislation into the US Congress
(the JUBILEE Act), and organized call-in days that have tied up the
lines at the White House =96 all calling on the Bush administration to
support 100% debt cancellation. In the coming weeks, Jubilee USA will
continue to raise the pressure on the Bush administration and the G7 to
support full debt cancellation. Jubilee USA will also organize an action
on October 1 at the G7 Finance Ministers meeting in Washington.

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2) Reason # 10 to come out for Debt Cancellation on October 1st!: If you
thought today was fun...just wait Oct. 1st will be a blast!

Today Jubilee supporters picketed in front of US Treasury.  Carrying
signs and banners calling for Treasury to continue to support the
proposal for 100% debt cancellation at the annual meetings of the World
Bank and IMF.

Signs read, among many things, "Don't drop the ball, Cancel it all!" and
"Secretary Snow, the debt has got to go".  The large group chanted and
cheered for an hour across the street from Treasury.  Many great and
powerful speakers such as Salih Booker from Africa Action and Holly
Burkhalter from Physicians for Human Rights, lent their voices to the crowd=
s
call for 100% debt cancellation!

"This year not next year! Freedom from debt now!"

Jubilee USA will be holding another picket in front of the G-7 finance
ministers meeting on Oct. 1st at Noon. This a critical moment for the
movement.  We need every voice to be out on Oct. 1st.  Every voice
calling for 100% debt cancellation now!

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3) NEWS ARTICLE

For This Relief, Much Thanks

The East African (Nairobi)
EDITORIAL
September 20, 2004
Posted to the web September 21, 2004
Nairobi

The US government is pushing for a robust new debt forgiveness plan for
the world's heavily indebted countries.

Two countries in East Africa, Tanzania and Uganda, are among the 27
countries that could see a 100 per cent write-off of their debts. Some
observers see the debt initiative as an electoral ploy by US President
George Bush - whose administration has swung to the extreme right and is
deeply unpopular in most countries of the world according to recent
opinion polls - to put on a gentle face ahead of the November elections.

Secondly, that Washington is offering the debt write off in order to get
support for the one debt cancellation it most desperately wants - Iraq's
$120 billion debt. Whatever Bush's motives, the US initiative is a huge
opportunity for Tanzania and Uganda to wean themselves of their high
dependence on donor support.

The improvements that could result from the write-off would make the
East African Community a healthier economy. Uganda and Tanzania need
every debt write-off they can get. Despite being among the first
countries to come under the highly indebted poor countries debt
cancellation programme (HIPC) in 1998, Uganda's debt has now hit an
all-time high of $4.3 billion.

Debt service payments also rose from $133 billion in 1999/2000 to $172
million in the 2002/03 financial years, before catapulting to the
current rate of $180 million. This has virtually wiped out all the
benefits that came out of HIPC. Tanzania's case is no different. Under
HIPC, Tanzania qualified for $2 billion in debt relief over 15 years.

This was expected to trim the country's annual debt payments by an
average of 47 per cent, from $193 million before HIPC in 1999/00, to
about $116 million from 2001 to 2010/2011. However, the relief has
resulted in only about a 30 per cent cut in debt repayments, and
Tanzania's ability to service its debts deteriorated last year because -
like Uganda - the prices for major exports like coffee plunged.

The fact that Tanzania and Uganda have to be rescued with a second
package of debt relief, however, places a heavy responsibility on them.
While HIPC was partly a reward for countries that had good economic
recovery policies, it is now widely agreed that it was a scheme to help
the World Bank and IMF write off debts that were uncollectible.

It's like a newspaper writing off bad debts owed to it by advertisers.
They do it so that their books look good, and only when they reach the
conclusion that their debtors are hopeless cases who cannot pay.

For that reason, HIPC also comes with a cloud that an economy is a
basket case and, therefore, can discourage investors. Tanzania and
Uganda need to use the new opportunities, if Bush's proposals are
approved at the World Bank and IMF's annual meeting next month, to prove
that they are capable of walking on their own, once they are back on
their feet. To fail to do so a second time, would be damning.

So, there's an urgent need to ensure that debt relief isn't turned into
a piggy bank for pampering governments favoured by powerful Western
nations. For example, corruption has been cited by both donors and
campaigners for honest government in Uganda as one of the main reasons
debt forgiveness hasn't had the impact it should have.

Yet the donors have not shown the same vigour in pressing Kampala to
deal with corruption as they have in the case of Kenya, which didn't
qualify for HIPC. The result could be that Kenya might well be able to
reduce the damage corruption does to its economy, and continue to do
relatively well, while Uganda, which can least afford to have
corruption, doesn't climb fast enough out of poverty.

This poses the second set of problems. Kenya and other poor countries
with 'stronger' economies, according to the latest proposals, will not
be considered for debt cancellation.

This creates a moral hazard, where delinquent nations are rewarded, and
those with better housekeeping are punished. It could undermine
altogether the campaign to encourage Third World governments to manage
their economies and public funds in a more accountable fashion in order
to pull their citizens out of the grinding poverty in which the majority
of them live.

We believe that, ultimately, for debt forgiveness to have a far-reaching
impact, the rich countries and the Bretton Woods institutions need to
see it in the context of the new economic realities all over the world.
For example, in Africa and elsewhere, countries are investing a lot of
political energy in creating or strengthening regional economic
initiatives like the East African Community.

For these trading and Customs blocs to work, governments need to
harmonise economic policy, as indeed Tanzania, Kenya, and Uganda are
trying to do with their budgets. But, as the example of even well
developed common markets like the European Union teach us, governments
are most likely to break ranks on agreed common economic policies when
they have internal budget problems.

Thus a government might not agree to a low tax rate with other common
markets, because it has a huge budget deficit. There is therefore a need
to remove the pressures of servicing debt from poor countries' budgets
as a general rule, whether they be very poor, poor, medium poor, or
almost-no-longer poor. This means a total debt write-off for all poor
countries.

But we have to be realistic. The rich nations aren't about to pony up
the trillions of dollars that would cost. So the medium-poor countries,
could be given a modest write-off, while the very poor get a total debt
cancellation.

It is a win-win situation where the good economic managers receive
acknowledgement, and the troubled and bad cases get incentives to pull
up their socks. It's not productive to continue the present pick and
choose approach toward poor countries' debt. The HIPC report card in
Tanzania and Uganda's cases is proof that it doesn't work.

Neil Watkins
Outreach and Communications Coordinator
Jubilee USA Network
(202) 783-0129
www.jubileeusa.org

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