COSATU AND SACC BLAST GOLD SALES (fwd)

[Robert Weissman <rob@essential.org>]

COSATU is the Congress of South African Trade Unions. SACC is the South
African Council of Churches.

COSATU Press Statement    22/6/99
The IMF, the Third Word Debt and Gold Sales

We welcome the G7 countries' decision to scrap debt owed to
them by the poorest countries of the world. We  wish to add our
voice to that of the progressive forces fighting  for the total
scrapping of the debt affecting millions of the  world's poor.
We however reject the intention by the IMF to sell 10% of their
gold reserves as a trade-off.  We similarly reject the conditions
of wholesale privitisation, leaner civil services and the reduction
of state spending placed on these countries.

Only increased poverty awaits the people of these countries if
their governments follow the IMF conditions.  After all, it was
the IMF's conditions and high levels of interest repayments that,
in the main, landed these countries to the dismal state that they are in today.

The gold sales are equally bad news rightly described by
Finance Minister Trevor Manuel as "a dangerous thing for the
mining industry."  Talk of the sales has already led to a drop in
the gold price to its lowest in 20 years.  Many of the countries
the IMF claims to help are gold producers who depend on gold
sales for their foreign currency.

Economists have warned that thousands of jobs will be lost if the
gold price stays at its current level for more than a few months.
This is all the more worrisome for a South African gold industry
that has shed 100 000 jobs in the past three years.

The IMF's decision to sell gold reserves therefore can only
result in more blows for those they claim to help.
        [contact: mukoni@cosatu.org.za]



SOUTH AFRICAN COUNCIL OF CHURCHES STATEMENT
25 June 1999

KOLN INITIATIVE OFFERS LITTLE HOPE TO INDEBTED NATIONS

The wealthy industrial powers have again missed an opportunity
to demonstrate genuine commitment to sustainable human
development by writing off the crushing debts of the world's poorest nations.

In the face of growing international pressure for complete and
immediate debt cancellation, G7 leaders endorsed a new debt
initiative at their annual economic summit, held last weekend
in Köln, Germany.  Although touted as a framework for "faster,
deeper and broader debt relief," the scheme merely polishes--
rather than breaking--the chains of debt that shackle many
countries to perpetual poverty.  Worse still, the plan seems likely to
 strengthen the North's economic stranglehold over the developing world.

The Köln Debt Initiative envisions an "expanded" version of
the Highly Indebted Poor Countries (HIPC) initiative,
currently being operated jointly by international financial
institutions.  This would aim to reduce the overall debt of
qualifying countries by more than half.

However, the HIPC initiative has never been capable of
providing a foundation for equitable, long-term development.
The scheme's emphasis on "debt sustainability" is intended not
to enable poor countries to escape onerous debt burdens, but merely 
to make them "manageable" so that they continue to pay their wealthy creditors.

Furthermore, the price of eligibility for the programme is the
slavish adherence to the economic prescriptions of the
International Monetary Fund (IMF)--so-called "structural
adjustment" packages--for up to six years.  These packages,
which may include such measures as currency devaluation,
privatisation, and the elimination of subsidies on food and
basic commodities, have added to the misery of many poor families.

Even World Bank and IMF staff have begun to question the HIPC
programme.  Three years after the scheme was introduced, 42
countries have been identified as potential beneficiaries, but
only three have been "approved" and only two (Uganda and
Bolivia) have received any relief.  A recent internal report
suggests that some countries may incur larger interest
payments as a result of their participation.  Independent
research has also found evidence of a correlation between
structural adjustment and increased debt.

The G7's proposals for financing the "super-HIPC" programme
are equally problematic.  The Köln initiative calls on the IMF
to sell 10 million ounces of its gold reserves to raise part
of the funds required.  This announcement has been met with
particular alarm in South Africa, where Finance Minister
Trevor Manuel has warned that the sales could further depress
gold prices already at a twenty-year low and prompt the
closure of many of the country's mines.

The SACC shares the Minister's concern for the tens of
thousands of miners--in South Africa and in other countries of
the South--who could be retrenched if mine owners shift their
resources to more profitable enterprises.  At the same time,
we also hear the cries of the millions of people in other
indebted countries who are struggling to survive in the face
of hunger, unemployment, and poverty.

Any assessment of the proposed gold sale must transcend narrow
national interests.  However, even from a global perspective,
the plan is seriously flawed.  G7 leaders are not planning to
apply the proceeds of the sale to debt relief, but merely a
portion of the interest on the proceeds.

The bulk of the revenue would be diverted to the IMF's
Enhanced Structural Adjustment Facility (ESAF), which makes
loans to finance the implementation of structural adjustment
policies.  This would diminish ESAF's reliance on contributions 
from IMF member countries and reduce its susceptibility to external 
pressure for reform.  At the same time, it would increase the Fund's 
capacity to entice cash-strapped countries into accepting the disastrous
"discipline"of structural adjustment.

The G7 Finance Ministers who drafted the Köln Debt Initiative
portrayed the plan as a framework for poverty reduction.  The
SACC welcomes this emphasis on poverty reduction, but awaits a
more convincing demonstration of the G7's commitment.

The Biblical concept of Jubilee, which has given moral
momentum to the campaign for debt cancellation, involves a
release both from debt and from slavery.  It is time for
economically powerful nations to abandon the assumption that
they know what is best for those they have impoverished.  It
is time for a wealthy global elite to cease the promotion of
systems of finance and trade that keep poor people in bondage.

We call on the G7 nations to acknowledge that social and
economic policies must be designed by the citizens of the
nations concerned, through open and accountable institutions,
and not by self-appointed "experts" in Washington.  We support
the demand, made by the World Council of Churches at its Eight
Assembly in Harare in December 1998, for the introduction of
"a new, independent and transparent arbitration process for
negotiating and agreeing upon international debt
cancellation".  This must be coupled with measures to
strengthen civil society and to enhance people's capacity to
shape the political and economic policies that affect them.

While we applaud the G7 nations for recognising the need to
address the debt question as a matter of urgency, a more
radical departure from the failed strategies of the past will
be required if we are to realise the profound vision of
justice embodied in the Jubilee ideal.

Charity N. Majiza (Rev.)
General Secretary

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