More odious debts for the Democratic Republic of Congo if the World Bank gets its way

Probe International reports that World Bank President Robert Zoellick is urging the Democratic Republic of Congo to pursue better governance as a way to entice more companies to build dams in the country. In his sights are the rehabilitation of the notoriously dysfunctional Inga 1 and 2 dams.

But if Zoellick has his way in the DRC, a new dam called Inga 3 will also be built, followed by the mother of all dams—the Grand Inga—which together would be constructed to harness the estimated 40,000-50,000 MW of hydro power potential on the Congo River. Proponents dream that the Inga dams complex, along with an equally mega transmission system, will power Africa—with some electricity left over to send to Europe.

Full article

Haiti finally completes debt relief process

Only one day after the Central African Republic, the IMF and World Bank have now also agreed to allow Haiti to complete the Heavily Indebted Poor Countries Initiative and receive $1.2 billion in debt relief. Haiti is the 26th country to complete HIPC. This is a major campaign victory after years of struggle for the poorest country in the Western hemisphere. In April this year, the US Obama administration said it would pay the remaining debt service that Haiti owed until it completed HIPC. This decision now makes that permanent, and means that Haiti also gets Multilateral Debt Relief and will have vital extra resources to tackle poverty and crisis.

Read the World Bank press release here.

Central African Republic gets debt relief

The International Monetary Fund (IMF) and the World Bank have agreed that the Central African Republic (C.A.R.) can complete the Heavily Indebted Poor Countries (HIPC) Initiative. The C.A.R. becomes the 25th country to reach the completion point under the Initiative. This means it will receive $207 million in debt relief. It also now becomes eligible for the Multilateral Debt Relief Initiative and so gets a further $182 million debt cancellation.

Read the IMF press release here.

African legal fund to help tackle vultures

The Financial Times reports that the African Development Bank launched a legal support organisation on Monday "designed to level the playing field for cash-strapped African states negotiating complex commercial transactions or facing litigation by vulture funds". This is something Jubilee Debt Campaign has been calling for since the Zambia v Donegal case in 2007, and the UK Government has been working behind the scenes to push it forward. However, legal assistance doesn't prevent the vultures attacking in the first place - see our End the Vulture Culture campaign to find out why the law needs to be changed.

Read the article in full: African plan to keep vulture funds at bay

One small step forward

An agreement by all 192 UN states on the financial crisis acknowledges our global interdependence

Joseph Stiglitz, Sunday 28 June 2009
guardian.co.uk

Last week, something unusual happened: the international community, coming together at the UN to discuss the global financial crisis and its impact on the developing world, reached a consensus on an agreement. This spelled out the issues to be addressed and laid out the way forward. Many had said it would be difficult for 192 countries to reach consensus, and that was why discussions should be limited to a self-selected group of 20. In fact, the UN agreement was stronger and more forceful than the G20 communique.

Full article

UN's turbulent priest refuses to go quietly

The Financial Times on the UN conference:

Presidents of the United Nations General Assembly - in office for a year - have little time to make themselves at home. [...] But for the UN's big powers the end of Father Miguel d'Escoto Brockmann's tenure in September cannot come soon enough. Western diplomats accuse him of abusing his position to pursue his own radical agenda and of bringing the UN into disrepute.

The latest bone of contention is his plan for a summit of world leaders later this month to discuss the impact of the financial crisis on developing countries. The event was mandated by member states in Doha last year, but critics reject His ambitions to use it to try to redesign the international financial architecture. Reforming bodies such as the World Bank and the International Monetary Fund, they argue, is best left to the Group of Eight and Group of 20 and is outside the remit of the General Assembly, the so-called G192 of all UN member states. Full article

When cashed-up IMF offers to help, steer well clear

Great article by Ross Buckley in the Sydney Morning Herald:

A year ago the International Monetary Fund was on the nose, its credibility in tatters. Today it is the darling of the rich countries.

[...] For 27 years, IMF policies have put the need for poor countries to service foreign debt ahead of their need to develop. Development has been subordinated to debt repayment.

So what happened? Has the IMF suddenly changed? Has it been reborn with new policies and perspectives? Have the needs of developing countries shifted?

No, no and no.

What has happened is the global financial crisis. The needs of rich countries have changed, specifically those of their financial sectors, not the needs of poor countries. [...]

Read the full article

Temporary debt moratorium needed for some poor nations, says UNCTAD Secretary-General

UNCTAD´s Secretary-General called for temporary debt relief for countries hard-hit by the crisis, telling a UN meeting that world attention to the crisis must not wane, regardless of signs of recovery in the developed world.

Full story: http://www.unctad.org/Templates/webflyer.asp?docid=11446&intItemID=1528&lang=1

Blog Action Day: Poverty and Finance

Today has been proclaimed Blog Action Day – when thousands of bloggers from every corner of the world write something to draw attention towards global poverty. At Jubilee Debt Campaign blogging against poverty isn’t unusual, but I’m going to use this year’s Action Day to make some connections between poverty and what’s foremost in the news – the credit crunch.

We have another name for the credit crunch – a debt crisis. The credit crunch has been explained as a lack of liquidity, or credit, available to banks on the international markets. Inject these markets with enough liquidity, restore lenders’ confidence enough to start lending again, and everything will come right. Hence the gigantic bail-out packages.

But actually the problem is less one of available credit, and more a massive over-accumulation of debt – much lent in a reckless way, like sub-prime mortgage debt, and packaged up in such a complex manner that no-one is quite sure how much or how bad the debt they hold amounts to – how ‘exposed’ they are to ‘toxic’ debt. Hence the loss of confidence.

Some commentators, like former head of Jubilee 2000 Ann Pettifor, have been predicting a ‘First World Debt Crisis’ for some time. These warnings went unheeded by a financial sector which has got used to having everything it’s own way.

This bears a strong resemblance to the debt crisis that the debt movement has been campaigning to end for 10 years. As today, banks in the 1960s and 70s lent huge amounts of money, in ever more complex and inventive ways, to developing countries. When interest rates soared and commodity prices fell, developing countries could no longer repay. The debt crisis was born – and 20 years later the world has still failed to learn the lesson.

Today developing countries’ debt stocks stand at a staggering $2.9 trillion and every day the poorest countries pay the rich world almost $100 million in debt repayments. Many countries in the world have been going through a financial crisis for more than 20 years.

Then, as now, many banks were effectively bailed out as the World Bank and other ‘multilateral banks’ gave new loans to pay off their old loans. But as the banks took the money, the poorest people in the world were still indebted – still couldn’t access health care, education or social security because their governments had to allocate such enormous sums to repaying old debts. Many countries remain in that state today.

We need to make sure that this time the financial sector is made to learn the lessons; that this time it is not the poor – in the developed or developing world – who pay the price for the recklessness of a few.

The answer isn’t ever greater freedom for the financial sector but greater regulation to make sure the financial sector is at the command of society rather than the other way round.

End Poverty Now forum - what next?

Anti-poverty campaigners gathered in Central London on Saturday for a forum to discuss what today's global crises (the financial crisis, the food and fuel crisis, and climate change) mean for campaigners against poverty. Were you there? If so what did you think?

Photo: Benedict Parsons/BOND

Unsurprisingly the financial crisis dominated, and speakers and activists talked about using it as an opportunity to explain how the overwhelming power of the financial system has been the cause of so much poverty and inequality in recent decades. There was a call for urgent regulation which would hold the financial sector accountable to democratic institutions across the world.

Tony Juniper (former head of Friends of the Earth), Celine Tan (the Third World Network) and Nick Hildyard (the Cornerhouse) showed the inter-connectedness of the crises the world is now facing and spoke of the necessity of going well beyond a single issue approach to campaigning. The anti-poverty movement needs to understand and convey the connectedness of the crises we’re facing – allowing ordinary people to understand how our actions or failure to act can impact on the developing world for better or worse.

A series of papers discuss these links in more depth:

• Tony Juniper and others, A Green New Deal report, July 2008
• Nick Hildyard, A (Crumbling) Wall of Money: Financial Bricolage, Derivatives andPower, 9 October 2008
• Jubilee Debt Campaign, The debt crisis and the credit crunch, October 2008
  

The afternoon was dominated by a discussion of whether current anti-poverty campaigning was up to the task of combating the crises faced by the world. Speakers from Make Poverty History North East, Leeds University and the Climate Camp argued for better working together by activists at a national and local level across a range of different issues, including better provision of educational resources and other means of empowering local activists.

There was widespread agreement that we must join the growing call for a radically restructured financial system, and ensure that any reformed system will place people and the planet at its core. We couldn’t afford to wait for months or years to join this call – immediate action is necessary.

The conference described itself as a starting point – to allow us to start conversations and actions which will strengthen the anti-poverty movement. It achieved that but real progress depends on others getting involved to reinvigorate and broaden the anti-poverty movement.

The networks who organised and supported the day include: The Global Call to Action against Poverty, Jubilee Debt Campaign, Trade Justice Movement, Stop Aids Campaign, Stamp Out Poverty, and Stop Climate Chaos.

Ecaudor - A View from Jubilee Scotland...

Debt campaigners from over thirty countries in the rich and poor world met in Quito,
Ecuador, over the last week to make plans for the international fight against
illegitimate debt.

The location of Ecuador was not chosen at random, for while international delegates
made plans the country’s officials and civil society members were finishing an audit
of Ecuador’s illegitimate debt, the first time that any country has put together an
official and properly-resourced exposé of unjust debt.

It was inspiring to participate, and see how Scottish debt activism fits into a
huge and highly diverse global movement. As the week wore on campaigners from Asia, Europe and the Americas first got to understand each other’s perspectives and
strategies, then to argue with each other, and in many cases to reach powerful
agreements. And all this against the backdrop of a country which is beginning to
assert itself strongly against the gross imposition of debt.

The two final resolutions that the conference passed were in support of the Haitian
people - whose suffering is currently so exacerbated by unjust debt - and also in
support of the Ecuadorian debt commission, with a particular hope that their
findings would inspire policymakers to renounce and repudiate the country’s
illegitimate debt.

As the conference breaks up, however, this final outcome hangs in the balance: the
commission does not deliver its report until the 28th of September. And there is the
small matter of a national constitution to steer through in the meantime. One thing
is for certain - the debt campaigners of the world may be flying out of Ecuador, but
they will be watching it extremely closely over the next few weeks. A small country,
it could be about to throw a punch at international debt that is well above its
weight.

James Picardo, Jubilee Scotland

Day 4 (actually 6 – I lost of couple of days):

I’m sitting in the closing session of the conference. Everyone’s really tired – it’s been a marathon discussion of some really heavy subjects – but it’s clear that it’s been worth it. The international debt movement is more real than it ever has been before and the amount of collective, global actions that have been agreed are astounding – and a bit scary.

The Debt Commission has still not officially reported. President Correa has had to travel to Chile to help deal with the de-stabilisation of Bolivia which is causing real concern amongst the delegates here. We do expect the report any day though, so keep your eyes out for information on the website.

We have passed resolutions calling for immediate debt relief for Haiti, which has been rocked by storms and a severe food crisis in recent weeks, and supporting Ecuador’s Debt Commission, and urging Ecuador’s government to follow-up on this report.

The news today – about further turbulence in the financial markets – has also made clear to us what a critical time this is for the debt movement. As an irresponsible financial system again engulfs millions of people in debt, we urgently need to transform the financial architecture that has inflicted poverty and suffering on many many countries over the last 30 years.

Back to the UK to get started…

Nick

Day 3 in Ecuador

Day Three
We've spent all afternoon with the Ecuador Debt Commission, and there was a real buzz as everyone realised what an exciting time this is in the campaign to cancel illegitimate debt. This is the first time any government has commissioned a body - drawn from Ecuador and other countries - to look at it's total debt and decide what portion is illegitimate. The way the Commission worked will serve as a model for countries right across the world. Moreover, depending on what President Correa decides to do once published, it could set a radical model in motion for other Southern countries.


Ecuador's debt is massive. Like many indebted countries, Ecuador was lent large quantities of money by US banks in the 1960s and 70s. In the late 70s and early 80s the US Federal Reserve - controlled by those same banks - increased interest rates from 6% to over 20%. Debt level soared from around $1 billion in 1970 to over $14 billion in 2006. In that year only 14% of Ecuador's annual debt repayments were repaying debt on new projects - a massive 86% represented interest payments on old loans.


In order to repay these debts - and meet the conditions imposed through these loans - Ecuador has massively over-exploited its resources (like oil) and has paid enormous sums to foreign 'experts' to advise it on how to privatise elements of the state. Not only have the poor of Ecuador suffered from some of these privatisations, and indeed had their human rights violated - for example by rising health care costs pricing them out of access to health care - but the Ecuadorian people have then had to pay many times over for the privilege, through debt and interest repayments.


The Debt Commission's primary objective was to stop the ongoing payments which continue to drain capital from the Ecuadorian economy. The Commission reported how tough their job had been - having had to sort through thousands of unmarked boxes of documents and, despite strong political backing, being obstructed by some bureaucrats in the Ministries and the Central Bank. When looking at the loans they defined illegitimacy as a loan which violated Ecuador's sovereignty, which violated human rights, or which damaged the people or environment. Even hardened debt campaigners reported being shocked by some of the loans they'd investigated.


Groups from rights around the world - Bangladesh, Philippines, Nepal, India and Mali - told how they were organising their own citizen's audits of their country's debts, and how important the Commission's work would be in helping those audits, and in helping their governments recognise the process.


The Commission will report to the President on Monday, so hopefully I can give more information about the content of the report then. But there is a real feeling here that this is the first concrete step towards justice for those oppressed by illegitimate debt in the world.


(Photo taken by 'quaziephoto' - Used under Creative Commons Licence)

Day 2 from Ecuador

Yesterday afternoon we were lucky enough to have a presentation from a member of the Ecuadorian Debt Commission. The Debt Commission is in more or less permanent session at the moment, as it needs to report to the President at the weekend (the picture to the right is from the launch of the Commission last July). He told us of the challenges the Commission had faced in recent months, especially institutional challenges - many in the government system still disagreed with the purpose of the Commission.

But he posed us other challenges. While some of Ecuador's debts bore all the signs of illegitimacy (notably had been used for projects unhelpful to Ecuador's people), others had been used for projects which were helpful for the people of Ecuador. But even those good debts had had serious
impacts on the fight against poverty in Ecuador because they had been used to impose unhelpful economic and political conditions on the government and had led to the massive outflow of funds from the country in the long-term and reinforced Ecuador's dependency on Northern countries and banks.

Most people probably think of illegitimate debt as something that arises from lending to dictators. But we've heard over the last day how the situation is much more complex and widespread, and most delegates here thought the fact that loans were so often used to infringe a country's sovereignty - through economic or political conditions - should in itself be grounds for judging that debt illegitimate. Of course loans are going to have terms of mutual accountability that must be abided by - but this is quite different from using these loans to force additional and
unrelated changes on a government.

One of the delegates gave a brilliant example to understand this issue better. If I go to the bank to get a loan to buy a car, the bank will of course want proof that I actually buy that car. That's a term of the loan. But if the bank says to me that I must always wear red while driving the car or that I must always play rock music in the car - or even worse that I must never stop at red traffic lights - this is totally unacceptable and in the worst case very damaging to me. Even if the bank forces me to do sensible things like stopping at stop signs or wearing my seat belt, I'm likely to be pretty irritated because that isn't the role of the bank. By imposing even sensible conditions, the bank is usurping the role of other state actors - like the police - and making itself a more powerful player than is justified in my life and my society.

Blogging from Ecuador

Nick Dearden, Jubilee Debt Campaign's Director, is in Quito in Ecuador for an international debt campaigners conference on Illegitimate Debt. This is his blog from the mountains.

Day 1:

I'm currently at a momentous event to discuss where the debt movement is going next. Around 50 campaigners from every continent in the world (bar Antarctica) are in Quito to discuss a more coordinated and high profile campaign on illegitimate debt. Movements from the global South (developing countries) have campaigned on the debt their countries bear in terms of power and legitimacy for many years, while Northern countries have focussed more on making sure debt is not 'unpayable' for poor countries.

While we've had amazing successes in cancelling developing country debt in the last 10 years, it is still nowhere near enough and most debt campaigns across Europe, the US and Australasia are now campaigning for governments to look at the illegitimacy of debts - where loans were lent recklessly for projects which had a negative impact on that country's people or which were siphoned off in corruption or used to impose inappropriate economic conditions like trade liberalisation on countries - surely those loans should not be the responsibility of the Southern country?.

We're in Ecuador because the government of President Correa is the first in the world to conduct a Debt Audit - which is examining the debts of Ecuador and working out which are legitimate and which illegitimate. The Audit could have a massive impact in putting the issue of illegitimate debts on the agenda internationally and forcing Northern lenders (countries and banks) to cancel some of the debts they lent irresponsibly. We hope the Audit will be published at the end of the week.

Today we're getting over altitude sickness (Quito is the second highest capital city in the world) and jet lag (some people have travelled for nearly two days to get here) while discussing what we mean by illegitimate debt and how we can get our message out more widely.