New Jubilee 2000 Report on G-8 Summit (fwd)

[Robert Weissman <rob@essential.org>]

from Jubilee 2000 Coalition, www.jubilee2000uk.org

Cologne Summit will offer  'crumbs of comfort' to the poorest
    countries on debt, according to new report 

     A new report from Jubilee 2000 Coalition reveals that world leaders
     are set to announce a deal on debt relief worth only five loaves of bread
     or one bag of rice every year to the average person in the poorest
     countries. 

     The information comes from inside intelligence and analysis of
     proposals from the British, German and US governments in preparation
     for the G8 summit, 18th – 20th June, when Third World debt will be on
     the agenda. Using the most generous offer, the British proposal
     announced by Chancellor Gordon Brown in February 1999, Jubilee
     2000 has calculated that despite promising rhetoric, the G8 will offer
     each person in 52 heavily indebted poor countries on average $2.83
     (£1.84) each year. Every one of these people owes an average $573
     (£349) to their Western creditors. 

     Ann Pettifor, director of the coalition said: "This report reveals that
     despite flowery speeches and grand gestures, G8 leaders are
     offering only crumbs of comfort to the world's most indebted
     nations. An unprecedented number of people will amass in central
     London on Sunday, June 13th and in Cologne on June 19th, to
     support the Jubilee 2000 call for the cancellation of unpayable
     debts in the Jubilee year – 2000. They will not be satisfied by these
     crumbs from the G8 table. They are calling on the leaders to drop
     the debt now." 

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EXECUTIVE SUMMARY

The Cologne G8 Summit and the chains of debt

     Executive summary

     The debts of the world's poorest countries are on the political agenda.
     The worldwide Jubilee 2000 movement has focused attention on the
     plight of people who bear the burden of debts that deprive them of
     basic rights to health, education and clean water – debts that entrench
     poverty and deepen injustice. 

     The existing Heavily Indebted Poor Countries (HIPC) Initiative has
     been exposed as being totally inadequate, with countries paying only
     slightly less than before on debt service. This failure has been
     compounded by the worldwide economic slump and a drop in
     commodity prices. 

     With mounting pressure on them to seriously address the problem, the
     leaders of the Group of Eight (G8) leading industrialised countries
     preparing for their June summit in Cologne competed with each other to
     promise improvements to the HIPC Initiative. Sums of $50bn, $70bn
     and more have been discussed. These are certainly large sums and far
     exceed what has been suggested before. But creditors have talked
     about writing off debt for more than twenty years. Are these latest
     proposals going to deliver a genuine exit from debt for the poorest
     countries? Will they help countries reach the internationally agreed
     2015 development targets? 

     The Cologne offer

     Based on intelligence gathered and new research undertaken in the
     build-up to the Cologne summit, this report reveals for the first time
that
     the improved HIPC initiative to be agreed at Cologne will mean an
     average annual benefit of around $2.83 (£1.84) for each person in
     fifty-two indebted countries – enough to buy perhaps five loaves of
     bread, or one bag of rice, every year. These are small crumbs of
     comfort. 

     The message is clear: Cologne will not release substantial new
     resources for reducing poverty. The difference, if any, will be marginal.
     By largely cancelling only the debt, which is not actually being serviced,
     creditors ensure the deal is almost cost-free to them – and 'benefit-free'
     to their debtors. 

     No exit from debt

     • What is likely to be agreed at Cologne will not deliver new resources
     to the poor. The increased sums being talked about will still only write
     off what is not being paid anyway. Equally, there will be no change to
     the highly criticised means of assessing how much debt should be
     written off. Debt "sustainability" remains almost entirely based on a
     country's export earnings. We understand that the British government
     has been defeated in its attempt to persuade other creditors to use a
     formula for debt relief that would give debtor nations a genuine exit
     from debt relief. The so-called 'fiscal criterion' is based on real
     government budgets and looks at how much countries spend on debt
     service compared to that spent on health and education. Using it would
     produce different, bigger numbers on the amount of debt relief required
     for countries to become 'sustainable'. 

     • Cologne is unlikely to promise any extra debt cancellation in the
     millennium year itself. At best, there will still be a minimum of three
     years to qualify and a further three years of strict economic conditions
     during which debt relief can be withdrawn. Unpayable debt has been
     debated by the lenders for years; rather than end the crisis, the lenders
     propose to continue the discussion while generations of children are still
     unable to go to school. The leaders are steadfastly refusing to seize the
     opportunity and deliver debt relief by the new millennium. 

     • There have been no serious suggestions to change a procedure which
     gives creditors total power. Using the debt relief carrot to impose the
     structural adjustment policies of the IMF, which many believe increase
     poverty, is unacceptable to both Jubilee 2000 campaigners and
     governments of indebted countries. The intended purpose of debt relief
     is to benefit the poor. If the IMF refuses to minimise costs and
     maximise benefits to the poor, it should no longer be a gatekeeper for
     debt relief. 

     The Jubilee 2000 alternative

     During the past year, Jubilee 2000 campaigns around the world have
     defined much more clearly the goals to be achieved. They stand in stark
     contrast to the little that is on offer. 

     • The Universal Declaration of Human Rights guarantees the right to
     health and education. All donor countries have accepted the target of
     halving the number of people living in absolute poverty by the year
     2015. Jubilee 2000 argues that money must be spent on basic health
     and education before debt service is paid, and that massive debt
     cancellation will be needed to meet these targets. Thus governments
     who continue to collect debt service from the very poor countries are
     violating human rights and reneging on their own promises to end
     poverty. 

     • The Jubilee 2000 call is for debt cancellation in the year 2000. What
     we are being offered is another decade of discussion about how we
     might finally write off a little more of the debt that is not being
paid. It
     promises to some day free a few people from debt slavery. It does not
     make the year 2000 a Jubilee year – a year of a new beginning. 

     • Jubilee 2000 campaigners in impoverished countries stress the need
     to disconnect debt relief from strict IMF structural adjustment
     conditions. The United Nations and even the World Bank itself
     criticises these conditions. Campaigners accept the need for good
     governance and fiscal probity, but they object to the IMF being
     allowed to be prosecutor, judge and jury on their countries'
     performance, on the grounds that its policies do not produce economic
     growth or reduce poverty. 

     • Jubilee 2000 campaigns in both rich and poor countries demand that
     money released by debt cancellation be used for poverty reduction and
     development, and they insist on conditions to ensure this. But they
     argue that detailed conditions imposed from the north have failed and
     will continue to do so. Instead, debt cancellation should be conditional
     on transparency and locally developed poverty action plans to use
     funds released. The Debt Review Body proposed by the Jubilee 2000
     director, Ann Pettifor, introduces one way of setting up an independent
     and transparent process involving civil society for debt relief
     negotiations. 

     The challenge

     Jubilee 2000 calls for: 

          • cancellation by the year 2000 

          • of the unpayable debt 

          • owed by the world's poorest countries 

          • under a fair and transparent process. 

     Despite the grand rhetoric and praise for Jubilee 2000 from the world's
     leaders, their announcements do not meet these goals. Tiny reforms to
     HIPC do not resolve the problem. 

     The G8 can yet confound its critics. It is still possible for the
leaders of
     the most powerful nations to take a bold stand and cancel debt in the
     year 2000. To do so would be to take a huge leap forward, for
     progress and justice. But the time for small steps is long past. A billion
     people in the world's poorest countries can live no longer on a few
     crumbs of comfort. It is time to drop the debt. 



     For the full report (priced £5 / $8) contact Jubilee 2000 –
     mail@jubilee2000uk.org – or at 1 Rivington Street, London EC2A
     3DT.