[stop-imf] New Jubilee USA Report on G-8 Debt Deal: First Step on A Long Journey

[robert weissman]

From: Neil Watkins <neil@jubileeusa.org>

Dear Jubilee members and friends,

Jubilee staff, with input and support from the Policy Working Group, are
today releasing, "First Step on A Long Journey," a 14-page report and
analysis of the G-8 debt deal announced on June 11 and to be further
discussed at the G-8 summit in Scotland in early July.

The report highlights the achievements, as well as the limitations and
shortcomings of the deal. It also makes recommendations for next steps. It
is intended as a resource for policymakers, the media, and grassroots
supporters.

Download the report on the Jubilee USA Network website at
www.jubileeusa.org:

2-page executive summary:
http://www.jubileeusa.org/press_room/firststepex.pdf
Full Report: http://www.jubileeusa.org/press_room/firststep.pdf

++++++++++++++++++++++++++++++++++++++++

Jubilee USA Network Briefing Paper, June 2005

First Step on A Long Journey: Putting the G-8 Deal on Debt into Perspective

Executive Summary

With considerable fanfare, the Group of 8 (G-8) Finance Ministers announced
a plan for multilateral
debt cancellation on June 11. The deal promises 100% cancellation of debts
held by some multilateral
creditors - the IMF, World Bank, and African Development Fund - for 18 of
the most impoverished
countries that have completed a program of controversial economic reforms
mandated by the
institutions. Up to 20 other countries are now in the process of completing
steps in the HIPC Initiative,
and would, according to the G-8 statement, be accorded the same cancellation
when they do.

The deal has elicited a wide range of responses: while some have reacted
with unqualified praise,
others, especially Southern-based movements and organizations have rejected
the agreement as
insufficient. Jubilee USA Network believes that the agreement represents a
first step - which we will
work to build upon in the years ahead - which will allow countries to retain
their own resources for
development and which sets a potentially very important precedent. But there
are also serious
limitations and shortcomings of the initiative. This briefing paper is an
effort to provide perspective on
the agreement which will inform policymakers, the media, and grassroots
supporters.

What Was Achieved

The G-8 deal on debt announced on June 11 is a significant first step. It is
a testament to the efforts of
people of faith and conscience across the US and globally as well as their
allies in governments, for it
is clear that the G-8 would not have taken up this issue without pressure
and public attention. In the
case of the 18 chosen countries, a central demand of Jubilee USA's campaigns
of recent years - 100%
cancellation of debts to the IMF, World Bank, and African Development Fund -
has been achieved.

.The agreement means that beneficiary nations will be relieved of more than
$1 billion in annual
debt service payments and these resources may be spent on health care,
education, clean water,
and HIV/AIDS prevention and treatment. Already, the Zambian government has
indicated that
funds released from debt cancellation will be used to provide life-saving
AIDS drugs to
100,000 Zambians living with HIV/AIDS;

.The deal represents the first time the G-8 has approved 100% debt stock
cancellation of
multilateral debts, including those held by the IMF, an important precedent
that campaigners
can use in future advocacy.

Limits and Shortcomings of the Agreement

The deal suffers from several flaws. The agreement remains rooted in the
failed, condition-laden HIPC
Initiative, suggesting no end to the requirement that countries implement
harmful economic policy
conditions in order to qualify for debt cancellation. Beneficiaries are
limited to countries that are
currently part of this Initiative (18 countries with the potential to rise
to an additional 9-20 HIPCs). The
agreement does not cancel debt to other significant creditors such as the
Inter-American Development
Bank. Jubilee USA will work to build on the G-8 agreement to include more
countries and creditors in
the months and years ahead. This report finds that some limits of the
agreement include:

.The deal immediately applies to only 18 countries, less than a third of
countries that need full
cancellation to meet the Millennium Development Goals, and well short of the
countries which
require cancellation of odious/illegitimate debts;
.It has taken 18 nations 9 years to qualify for debt cancellation; at
current rates of progress it
could take a decade for the 20 potentially eligible HIPC nations to benefit
from 100%
cancellation and this must be avoided;
.The amount of debt stock to be cancelled by the agreement - $56 billion -
represents only 10%
of the amount of debt stock cancellation required for nations to meet the
MDGs, goals which
themselves are only a first step towards poverty eradication;
.Because the Inter-American Development Bank (IDB) has been excluded from
the deal, 4 of
the 18 nations - Bolivia, Guyana, Honduras, and Nicaragua - are scheduled to
pay $1.4 billion
in debt service over the next five years to the IDB.
.The significant burden of odious/illegitimate debt held by nations across
the South remains
completely unaddressed in this agreement.

The Challenge Ahead: Expand the List; Cut the Conditions

For civil society in the 18 countries, the task now will be to monitor the
cancellation to ensure it
happens, that no new economic conditions are introduced in the process, and
then to hold their
governments accountable for how they make use of the savings - to ensure
that proceeds benefit the
people who need it most. For Jubilee USA Network, the challenge now is to
build on the precedents set
by the June 11 agreement to win debt cancellation for countries excluded
from this deal, as well as
work to eliminate harmful economic conditions.

In the short-term, we call on the G-8 to:

(1) Avoid delays in providing cancellation to those countries who qualify
for the cancellation;
(2) Expand the list of countries to include all impoverished nations and
countries in crisis - at least 62
nations require full cancellation to meet the MDGs and 50 nations are in the
JUBILEE Act, for
instance;
(3) Cut all economic conditions countries must meet to qualify, as these
policies have failed to increase
growth and reduce poverty; and
(4) Include all creditors - begin by canceling 100% of debt of impoverished
nations to the Inter-
American Development Bank and Asian Development Bank.

In the medium to long-term, Jubilee USA Network will redouble its efforts to
work with global South
partners to highlight and advocate for the cancellation of odious and
illegitimate debts and debts to
other creditors. It is also clear that cancellation of debt is only one of
many necessary steps to eradicate
poverty and reverse economic injustice. Jubilee USA Network will also work
with partner
organizations and campaigns towards our broad Jubilee vision which includes
both freedom from debt
as well as the establishment of right economic relations between nations. It
is clear that the G-8
agreement is an important first step on a long journey towards freedom from
debt.

For full report, see: http://www.jubileeusa.org/press_room/firststep.pdf