[stop-imf] 50 Years' statement on G8 debt deal

[robert weissman]

http://www.50years.org/cms/updates/story/265

Jun 21, 2005

G8 Debt Cancellation Deal: An Incomplete, Yet Positive
Step Forward

The announcement by G8 Finance Ministers on June 11 of a
deal to cancel debts claimed of 18 Global South countries
by the IMF, World Bank, and African Development Bank
(AfDB) represents a significant success for debt
campaigners around the world.

Since mobilization on the debt issue began with the
Jubilee 2000 campaigns in the mid-1990s, activists have
never withdrawn the pressure on wealthy governments to
acknowledge the devastating, hypocritical, and unnecessary
debt crises afflicting most developing countries. This
deal, which is notable for eliminating 100% of the debt
stock claimed by these institutions, means that
governments in 18 countries will no longer have to pay
unjust debts and can now count on a steady amount of
revenue whose use they can determine.

That the G8 deal includes debt claimed by the
International Monetary Fund (IMF), the most demanding of
creditors and the most resistant to cancellation, is
important, for it is that debt that is most exploited to
impose conditions on countries ? and because there had
been resistance to including IMF debt until the last
minute. But a closer reading of the agreement reveals that
it does not ensure that the people of the Global South
will regain control over economic decisions that affect
their lives on an intimate and daily basis.

What the Deal Says:

While they have acknowledged for the first time that 100%
debt cancellation is possible, the G8 Finance Ministers?
manipulative tendencies restrict the deal to only 18
countries, when most observers identify at least 60
countries that require comprehensive cancellation. The
deal agreed upon by the G8 will cancel the debt owed to
the World Bank, the IMF, and the African Development Bank
(AfDB) for: Benin, Bolivia, Burkina Faso, Ethiopia, Ghana,
Guyana, Honduras, Madagascar, Mali, Mauritania,
Mozambique, Nicaragua, Niger, Rwanda, Senegal, Tanzania,
Uganda, and Zambia. The chosen countries are the only ones
to have been certified by the institutions to realize some
debt reduction ? a rate of two per year.

This small number is derived from the framing of the deal
as an extension of the Heavily Indebted Poor Countries
(HIPC) debt initiative, a joint IMF/ World Bank program
initiated in 1996, which the World Bank itself has
admitted is a failure. The 18 countries under discussion
have reached the ?HIPC completion point,? i.e. they have
implemented the sweeping neoliberal economic reforms that
the program demands, often with devastating results.
Another 20 countries would be eligible for debt
cancellation when they have fully instituted the HIPC
conditions. By retaining the HIPC structure, the G8
perpetuates the requirement that countries submit to
demands for economic disarmament in favor of promoting the
interests of foreign capital before they can get the
consequential debt considered for cancellation.

Although the emphasis on economic conditions is deeply
troubling, it should be noted that the agreement does not
explicitly call for any new conditionality (HIPC
conditionality is already in place). We will continue to
advocate for the expansion of the debt deal to all
countries in need of it while ensuring that it does not
expand in such a way as to create new conditions. We
reiterate our call for 100% cancellation without
conditions to restore self-determination and a democratic
development process.

Limiting the deal to HIPC completion countries also means
that a large number of countries with illegitimate and
odious debts are also excluded. Even if the G8?s deal
eventually includes the 20 expansion countries, it will
still only affect a portion of all countries that
currently sacrifice large amounts of public spending to
servicing the debt burden. For many countries, these
sacrifices are made because creditors consciously lent
money to oppressive regimes ? Mobutu in Zaire and Marcos
in the Philippines, for example ? that either sent the
funds offshore or used them in the oppression of their own
people. The debt burden is now being carried by women,
children, and families that did not benefit from the
original loans.

The scope of the debt cancellation is also limited in that
it does not include debt owed to the Inter-American
Development Bank (IDB), and there is no indication that
Asian Development Bank debt will be included if and when
Laos, the sole Asian country in the current group of
countries deemed eligible, were to get its debt cancelled.
Activists are also calling for the cancellation of debt
owed by countries still recovering from the recent tsunami
disaster, and the Asian Development Bank debt should also
be discussed in this regard. The exclusion of the
Inter-American Development Bank from the list of
institutions canceling debts also demonstrates the G8?s
absence of vision. For many countries in Latin America and
the Caribbean, the IDB is the largest creditor.

But make no mistake: this move by the G8 represents an
acknowledgement that the system they have set up to manage
debt and Southern country economies is unsustainable.
Activists should now exploit this concession to win the
comprehensive debt deal that the world requires.

What the Future Holds:

Re-emphasizing neoliberal conditions and the further
politicization of debt relief: In his statement, President
Bush says ?we're not interested in supporting a government
that doesn't have open economies and open markets.?
Perhaps this should read, ?we're interested in
politicizing aid even more than it is already.?

Because this deal is only open to countries that have
already gone through HIPC, it means that a country's
economy must be completely dependent on world markets in
order to qualify for debt cancellation. There is still the
question of what may happen if countries free of the
control of HIPC, other IMF, World Bank, and AfDB
structural adjustment programs, and the debt burden,
decide to exercise their own economic sovereignty in ways
with which the powers that be would not approve.

There has been talk in recent weeks about a new IMF
facility, the Policy Support Agreement, that would pave
the way for the IMF to maintain control over countries
that do not borrow or are no longer borrowing from the
IMF. The IMF currently plays a role of ?gatekeeper? for
international lending; if it deems a country is not
?creditworthy,? other international creditors will
withdraw lending. The new facility will serve as an IMF
?stamp of approval? without an IMF loan. Nigeria has
already implemented a similar agreement with the IMF, and
many more countries, eager to find international
creditors, will likely follow suit.

Such a mechanism, were it to see the light of day, could
change the face of structural adjustment - it would no
longer require developing countries to borrow in order to
be subject to the ?Washington Consensus?. It could be that
just at the moment when the global justice movement has
succeeded in getting rid of the onerous and constricting
debt burden, the IMF and the G8 countries have found
another mechanism to serve the same function. This timing
is probably not coincidental.

Next Steps:

Debt cancellation has been touted as an ultimate act of
charity, however, people's movements in the indebted
countries and their allies around the world have long
pointed to the illegitimate nature of their debt burdens,
saying, ? Don't Owe, Won't Pay!? Citing decades of loans
knowingly made to dictators and other corrupt regimes, and
billions of dollars already repaid, they have demanded
100% debt cancellation without harmful conditions. Debt
cancellation is an imperative of justice, not a dispersal
of alms. To the extent that this announcement is a
victory, it is a victory for those in the Global South and
elsewhere who have campaigned in the streets for this
justice.

Although it is encouraging for us to see debt cancellation
in the fore of international discussion, we must not
compromise our demands. We must demand the expansion of
the principle of 100% debt cancellation to include ALL
countries in crisis ? countries undergoing economic
crisis, natural disasters, and the HIV/AIDS crisis. We
must continue to call for the removal of any
externally-imposed conditions on debt relief, including
HIPC conditions, from ANY agreement on debt cancellation.
And we must demand that debt cancellation include ALL
multilateral debts owed the Inter American Development
Bank and other regional banks.

----------------
50 Years Is Enough Network
3628 12th St NE
Washington DC 20017
fon: +1 202 463 2265
fax: +1 202 636 4238
web: www.50years.org