50 Years: Results of the Cologne G-7 Summit on Debt (fwd)

[Robert Weissman <rob@essential.org>]

50 Years Is Enough: U.S. Network for Global Economic Justice
June 22, 1999

Network Director Njoki Njoroge Njehu has just arrived in London after
attending numerous events, and protests with numerous (40,000!) people, at
the G-7 Summit in Cologne, Germany.

She reports that the feeling among the dozens of leaders of international
Jubilee 2000 campaigns gathered for the Summit is that it delivered
precisely the disappointing news we had been bracing for.

While media reports are telling people that some $70 or $90 billion in debt
will be forgiven under the new G-7 plan, in reality the plan announced is a
minor revision of the already-existing HIPC Initiative of the IMF and World
Bank.

The key points are these:

+ instead of reducing countries' debts so that they will be just under twice
their annual exports earnings, the new plan would reduce them to
one-and-a-half times annual exports earnings.

+ eligibility for HIPC benefits would be somewhat liberalized, meaning that
seven more countries might get debt reduction than was previously the case.

+ the issue of the time a country must spend under structural adjustment has
been finessed in a clever (some might say devious) way.  Although the
details are not yet available, from what we can gather, the G-7 is saying
that countries will now be eligible to get reductions after satisfactory
completion of one three-year structural adjustment program under the IMF's
supervision.  BUT, it appears the debt will be kept on the books until a
second SAP is completed, meaning that if the government does not satisfy IMF
requirements for that second 3-year period, the debt would be reinstated in
full (possibly with interest figured in).  So the important thing does not
change: in exchange for debt relief countries will still have to commit to 6
years of structural adjustment.  It is good that the actual reduction is
moved up, but when it is acknowledged that it is the SAPs themselves that
are causing the poverty, debt, and despair, that change is rather
inconsequential.  Nothing short of de-linking debt relief from structural
adjustment -- and shutting down IMF/World Bank structural adjustment
altogether -- will suffice.

+ the White House press release says that the IMF and World Bank will be
asked to target the savings from debt relief on health, education, and
consultation with the population on the design of economic programs.  Nice
rhetoric, but let us keep in mind that the institutions we're talking about
doing this are those that view health spending as helping clinics design and
implement fee schedules for services that used to be provided without
charge, and that consultation for the World Bank usually means an hour-long
meeting in which people are informed of what is in store for them (and the
IMF has never ever consulted with anyone outside government officials).

As Njoki points out, the '80s and '90s have been filled with "first steps"
to a more enlightened debt policy -- the G-7's Naples terms for bilateral
debt relief, the G-7's Halifax declaration that the institutions should
devise a debt program, the announcement of the HIPC program in 1996, etc.
etc.  This is one more small increment, and it hardly answers the demands of
the international Jubilee 2000 movement.  We still have much work to do.

In closing, let us reiterate our fundamental view of the HIPC Initiative,
which applies just as fully to this revised HIPC.  It is essentially a
promise of debt relief that is used to bribe governments into rigid
adherence to structural adjustment programs they might otherwise not agree
to or feel less compunction about deviating from.  Its results have fallen
far short of the promises, as the experiences of Uganda, the first
beneficiary (which is now eligible for HIPC again a year after receiving
relief), Mozambique (which would get a reduction in annual debt payments
from $110 million to $100 million in exchange for one last SAP demand:
quintupling user fees at public health clinics), and Burkina Faso & Mali
(which learned from a leaked memo in April that they would probably be
paying more after HIPC than before).  The revisions may soften those
outrages a little bit, but not by much -- and more importantly, the
structure has not changed at all.  Structural adjustment, the most damaging
systematic economic torture designed in the 20th century, is still the name
of the game.

We will be sending out more information and alerts in the near future, as
this issue remains a hot one in the U.S. and elsewhere around the world.
The progress of the Jubilee 2000 campaign will continue.