[stop-imf] Responding to the Debt Deal: Where's The Jubilee?

[robert weissman]

http://www.tompaine.com/articles/20050630/wheres_the_jubilee.php


*Where's The Jubilee?*

/The G8 debt deal should provide an opportunity for us to claim our
victories while still pushing for more./

/
by /*Mark Engler


*Seeing President George W. Bush and British Prime Minister Tony Blair
touting their good deeds on behalf of the world's poor is enough to make
any opponent of empire and corporate globalization cringe. Perhaps
because of this objectionable sight, progressives have been divided in
their response to the announcement of a major deal on debt cancellation.
In advance of next week's summit in Scotland, the leaders of the G8
industrialized countries, led by Bush and Blair, agreed to cancel 100
percent of debt owed by 18 of the world's poorest countries to the IMF,
the World Bank and the African Development Bank.

While some on the left have applauded the deal, many others have focused
on asking, "What's the catch?" Some have gone so far as to charge that
the agreement actually does more harm than good by attaching harmful
strings to debt relief.


Certainly, there is reason to be skeptical: You don't have to be a
hardened cynic to wonder about the true scope of Bush and Blair's
compassion. Yet ultimately, the debt deal, while far from perfect, is a
genuine advance-the product of a decade of increasing social movement
pressure. No doubt, those of us who have campaigned for debt
cancellation or sympathized with the cause should publicize the limits
of the agreement and push for greater change. But we should do this
while also celebrating the progress we have made. Rather than letting
the leaders pretend that the debt cancellation sprang from the goodness
of their hearts, we should insist on giving credit where credit is
due-highlighting the dedication of activists throughout the world who
have moved the injustice of debt to the fore of international discussion.

Those progressives who have attacked the debt deal emphasize that, even
in announcing the cancellation, G8 finance ministers explicitly reaffirm
a neoliberal economic paradigm. In their statement, the G8 leaders
declare that "boost[ing] private sector development " and "eliminat[ing]
impediments to private investment, both domestic and foreign" remain
central to their model for development. With regard to debt relief, they
state that "good governance, accountability and transparency" will be
required for countries to receive cancellation. Historically, such terms
have been code words for the imposition of structural adjustment on poor
nations. According to G8 ministers, a country practicing "good
governance" is one that wholeheartedly embraces the Washington Consensus.

While the rhetoric of the G8 statement feels disturbing, such posturing
comes as standard fare in official foreign policy declarations. In
practice, the G8 deal does not create new conditions for cancellation.
It merely keeps in place the conditions required by the existing Heavily
Indebted Poor Countries Initiative, or HIPC.

HIPC was created in 1996, and expanded in 1999, in response to a growing
chorus of advocates demanding debt cancellation. The program promised
relief to 42 "qualified" poor countries, largely in sub-Saharan Africa.
However, in order to have debts cancelled under HIPC, the countries had
to go through years of World Bank and IMF-mandated economic
restructuring. Even the countries that did so saw their debt service
payments decrease, on average, by only 33 percent. The final goal of the
HIPC program was to eliminate just 65 percent of the countries'
debts-far less than full cancellation.

Under the new G8 agreement, 18 countries do receive full debt
cancellation from the IMF and World Bank, and nine other countries may
be granted similar relief at a later date. The 18 chosen countries are
those that have reached "completion point" under HIPC, meaning that they
have already complied with the onerous economic mandates. Since the G8
deal keeps this "conditionality" in place, new countries wishing to be
included in future cancellation must still endure neoliberal
"adjustments." Obviously, this is a problem.

That said, it is clearly better for poor countries that have already
suffered HIPC conditions to receive full cancellation, rather than
inadequate, partial relief. Full, 100 percent cancellation has been one
of the foundational demands of the debt relief movement. It is something
that has been resisted by wealthy nations through years of mass protests
and persistent lobbying. By affirming the legitimacy of this long-denied
demand, the G8 agreement sets a landmark precedent.

This breakthrough represents a significant victory. It marks a shift of
at least a billion dollars a year in resources back to poor nations.
Arguably the most effective form of aid, debt cancellation allows
countries to retain and use their own funds to advance human
development. Contrary to the claims of conservative critics, it works.
Even the limited cancellation achieved through the HIPC program produced
some impressive results. World Bank statistics show that between 1999
and 2004, the 27 countries that had received partial debt relief under
HIPC were able to almost double their spending on poverty reduction
programs-including education, health care and clean water. In one
example, some 2.2 million people in Uganda gained access to water as a
result of a post-1997 debt cancellation.


Some large European aid groups, and even progressive stalwarts like John
Pilger, have complained that, in order to finance the debt deal, the
United States will be shifting some funding away from World Bank "aid"
programs. Countries will lose in aid what they gain in debt service
relief, the argument goes. However, this is a misreading of the
compromise that was brokered in order to push through the debt deal.
While some funds will indeed be redirected, the United States and other
lenders have agreed to make more money available for Bank "aid" in order
to meet demands for a net increase in funding. For Pilger and the
charities, that should qualify as a victory-albeit a partial one. For
those of us who don't look upon the defunding of the World Bank as such
a bad thing, the question remains as to why such advocates were so set
on "additionality" in the first place.

Perhaps more important than what has already been gained, the debt deal
puts advocates like those in the Jubilee movement in an excellent place
to advance further demands. Ending conditionality will be easier now
that full cancellation has been accepted as both morally just and
politically feasible. Moreover, G8 nations have progressively less
ground on which to deny relief to countries beyond the 18 already
included. In addition to the 20 other countries still in HIPC, debt
relief advocates can devote their attention to highlighting the plight
of indebted poor countries like Haiti, Nigeria and the Philippines,
which were not included in the previous program because of the specific
formulas used by the World Bank to determine eligibility.

Likewise, the movement is now poised to force the issue of "odious" debt
on the G8, challenging the legitimacy of debt incurred by repressive
regimes in places like Indonesia, Chile and South Africa. While odious
debt, as such, is not included in the current deal, the agreement has
contributed to the momentum that has been building around the issue at
least since the Bush administration campaigned to have Iraq's odious,
Saddam Hussein-era debts forgiven.

Finally, in addition to ending conditionality and lengthening the list
of countries getting relief, activists will be able to leverage the G8
precedent while working to expand the list of institutions canceling
their debts, forcing often-overlooked multilateral creditors like the
Inter-American Development Bank to live up to the established standard.

The debt deal both represents a measurable improvement over the previous
state of affairs and puts advocates in a much better position to push
for greater gains. That, in short, is a fine definition of a victory. In
a world of challenges and setbacks, where the obstacles confronting
progressive movements are enormous, it is all too easy to wallow in
despair. If for no other reason than that, we should take care to claim
our wins-and to celebrate them-before continuing with the work ahead.

--/ Mark Engler, a writer based in New York City, is an analyst with
Foreign Policy In Focus. He can be reached via the web site_
http://www.DemocracyUprising.com_. Research assistance for this article
provided by Jason Rowe./