Queries on Legality of External Debt

[Robert Weissman <rob@essential.org>]

Queries on Legality of External Debt

By Abraham Lama

LIMA, May 30 (IPS) - Regional economists and lawyers are raising
questions about the massive 700 billion dollars foreign debt bill
owed by Latin American and Caribbean countries.

The legal aspect of incurring such massive debt came up at a
conference in Lima last week which discussed 'External Debt:
Global Solidarity and  Debt Elimination.'' The conference ended
Thursday with   demands for public hearings on the whole debt
question.

Delegates from nine countries questioned the legitimacy of a
large part of their countries' foreign debts, pointing to three
recurring irregularities, and recommended taking their case before
world tribunals such as the International Court in The Hague.

They agreed the first issue to be tackled, through national
hearings and  other legal processes, was debt restructuring fraud
allegedly committed in some cases by corrupt government officials.

The conference called for a probe into the unilateral decision
of the international lending agency, the International Monetary
Fund (IMF),  to change previously fixed interest rates into
variable rates, a move that increases debt totals and benefits
creditors.

Delegates also recommended legal investigation into the
conversion of private debt into public debt that occurred in some
Latin American countries.

Latin America's total external debt increased from 300 billion
dollars in the 1950s to 648 billion in 1980, and now  stands at
more than 700 billion dollars.

The conference was organised by Peru's delegation to the
Jubilee 2000 World Coalition, which proposed an international
campaign to collect signatures in support of Pope John Paul II's
exhortation of Paris Club bankers to forgive the debts of poor
countries.

The Pope's Jubilee 2000 initiative has been based on a biblical
story whereby every 50 years, creditors forgive their debtors,
money lenders hand over mortgaged land, and slaves are set free.

John Paul II declared external debt to be a modern form of
slavery and that the beginning of the new millennium should be
celebrated with the forgiveness of the poorest countries' enormous
foreign debts.

Famous personalities from around the world, including singers
Luciano Pavarotti and Michael Jackson, former boxing champion
Mohammed Ali, and religious leaders such as the Dalai Lama, have
actively supported the initiative.

The Pope's demands also drew the backing of the Lima conference
but economists stressed that ethical claims and  questioning the
legality of debt did not have much chance of success unless
accompanied by grass-roots  mobilisation.

Alejandro Olmos, founder of the National Forum for Argentinean
Debt, gave as an example the case begun in his country in 1980,
which proved through evidence, testimonies and expertise that the
debt contracted during the military dictatorship of 1976 to 1983
was illegitimate.

''Opening the legal route is one of the fundamental roads to
independence for our people,'' concluded Olmos.

Alberto Acosta, an Ecuadoran of the Latin American Social
Research Institute, said, ''in many cases, debt was contracted
irresponsibly by our governments, acting in complicity with the
creditors, who pushed unnecessary loans on us in order to promote
their own business.''

Economist Oscar Ugarteche, a member of the Peruvian Jubilee
2000  Network, suggested corrupt Latin American officials should
be sued in the creditor countries.

''If we are able to make a case of corruption against those who
participated in illegal debt restructuring, we'll open an
important political space -  and if we win, we'll be showing the
First World that corruption also involved the banker who paid
commissions,'' Ugarteche affirmed.

Ernesto Arias Schereiber, head of the Lima Lawyers College,
said that his group had asked Peru's Economics Ministry to include
a 'Legal Reservation' in its Letter of Intent to the IMF, which
would permit legal action on debt agreements signed before 1990.
(END/IPS/tra-so/al/ag/ld/mk/99)

       [c] 1999, InterPress Third World News Agency (IPS)
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