Freeing poor nations from $220B burden

Debt-Free in 2000?

A book of the Old Testament is inspiring a global grass-roots movement aimed at giving a fresh start to the world's most impoverished countries by the year 2000.

Taking its lead from the "year of jubilee" proclaimed in Leviticus, a coalition led by faith-based organizations - Jubilee 2000 - is now active in 45 nations pressing for cancellation of the poor nations' international debt.

"People are motivated and moved by the biblical roots of this campaign," says Carole Collins, US coordinator for the effort. "In the vision of Jubilee," says an Episcopal Church paper on the subject, every 50 years, "'right relationships' are restored, social inequalities are rectified, slaves are freed, and debts are canceled," in recognition of God as the provider of all.

As disparities between rich and poor countries widen, social conditions in the poorest nations are deteriorating. The World Bank identifies 41 "heavily indebted poor countries" (HIPCs), and they are paying an average of 40 percent of revenues for debt service. Many are diverting scarce resources from education, health, and infrastructure programs, often with devastating consequences. Development aid, meanwhile, is at the lowest rate in a half century.

The question is whether the Jubilee movement can persuade wealthy creditor nations to cancel the debt - or at least to offer "faster and deeper" relief than is available under current-debt reduction programs. Ninety percent of the approximately $220 billion debt is owed to individual governments and the multilateral institutions (World Bank and International Monetary Fund) where industrialized nations hold control.

"We still have a year and a half and this campaign is really snowballing," says Justin Forsyth of Oxfam International, which is active in the coalition, "but we're a long way away from a huge breakthrough on this issue."

Many in the movement are upbeat about prospects, both because of mushrooming grass-roots enthusiasm and what they see as a new international mood. They see the next six months leading up to the summit of the Group of 8 industrialized nations (G-8) in Cologne, Germany, next June as crucial.

Calls for change

Jubilee 2000 got its start in 1996 in Britain, where it mobilized 50,000 people for a show of support last May at the Birmingham G-8 summit. The British government's bid to spur changes on debt at that meeting was rebuffed, however - most vigorously by Germany. But a new center-left German government has since been elected, and its minister for international development in a recent interview indicated an intent to propose changes that would be presented at Cologne to speed and broaden relief. If this becomes official policy, it would be a significant shift.

Germany and Japan have long opposed debt cancellation, says John Sewell, president of Overseas Development Council in Washington, and other countries aren't far behind. "There's an ingrained reluctance to forgive debt."

Cancellation isn't in the interests of debtors, some say, because it would harm their capacity to borrow in the future. It could also pose a "moral hazard," rewarding cases of irresponsible management at the expense of others who have done a good job and creating expectations that future debts might be forgiven. Advocates say there's an element, too, of creditors wanting to maintain leverage over economic policies.

"What we are trying to achieve," says a senior United States Treasury official, "is to reduce the debt to the point where the country can afford to service it and still have adequate capacity to grow in the future, yet get out from under the burden."

There is a growing recognition that the situation is dire. In a meeting with Anglican bishops in July, World Bank President James Wolfensohn acknowledged that "we are losing the battle" against poverty, and that debt repayment was "a principal reason" social and other services cannot be provided in the poorest countries.

Mr. Wolfensohn has begun meeting regularly on development issues with religious leaders, including a recent conference at Seton Hall University in New Jersey on "Ethical Dimensions of International Debt."

The World Bank launched a new debt reduction initiative for HIPC nations in 1996, but so far there are agreements for only seven: Uganda, Bolivia, Burkina Faso, Guyana, Ivory Coast, Mozambique, and Mali. "We are satisfied with the progress we have made," says Axel van Trotsenburg, the bank's HIPC manager, "but also recognize that much more needs to be done."

Debt a moral issue

The HIPC initiative is applauded for reducing, not just rescheduling debts, but widely criticized for being too strict in its requirements and taking too long (as much as six years or more) to provide actual relief.

Individuals and corporations have the option of bankruptcy, critics say, while poor countries simply sink under the weight of their debt burden.

It's a moral issue to many. "Countries that can't afford to provide potable drinking water shouldn't be forced to make debt payments at the expense of investing in their own people," says Barbara Kohnen, a policy adviser at the United States Catholic Conference.

Others point to the debt incurred by corrupt authoritarian leaders that used loan monies for prestige projects or military spending - or stashed them in overseas bank accounts. Some were made to strongmen who were cold-war allies, says Jo Marie Griesgraber, project director at Center of Concern in Washington. "We need to recognize we got what we paid for - the votes in the UN by Mobutu [of the former Zaire] and others." The poorest people in those countries, she adds, shouldn't have to shoulder the burden.

Many churches echo that view. Pope John Paul II, who called in 1994 for debt cancellation or substantial relief, last month called the debt a "subtle form of slavery." Anglican Archbishop Njongonkulu Ndungane of Cape Town criticizes the complacency of well-off countries and points to South Africa's example: The Mandela government in 1997 cancelled Namibia's debt.

The Anglican church took a strong stand on debt at its global Lambeth Conference in July, as did the World Council of Churches this month at its World Assembly. The Presbyterians, Mennonites, Evangelical Lutherans, and United Church of Christ are involved.

Firsthand view

Many churches have been galvanized by the experiences of their members in poor nations, as Christianity spreads in the developing world. "It's a partnership question, responding to the pleas of our Anglican brethren abroad," says Tom Hart, government relations director for the Episcopal Church.

Jubilee 2000 USA was formed in 1997 by a "religious working group" of denominations. The priority is a legislative strategy, says Ms. Griesgraber, steering committee chair. They are seeking bipartisan support to introduce a bill in the next Congress to accomplish "definitive debt relief."

The bill will seek elimination of the bilateral debt owed to the US for aid loans; US leadership in reducing multilateral debt; and modifications to HIPC criteria, including ways to ensure that funds freed up go to reducing poverty.

Lisa Wright of Church World Service says Jubilee estimates that a little less than $1 billion will be needed from the US over the next three years to accomplish this. In the '90s, the US has cancelled $2.7 billion in debts owed it by the 25 poorest countries, and another $1.5 billion is outstanding, according to the Treasury Department. But it wouldn't take that much to cancel it, according to Jubilee, since bilateral debt is written off according to market value.

To win over Congress, Jubilee will look to committed folks across the country. "Somehow the spirit is abroad in the land," says David Bryden, communications director. "I call a group to ask if they've heard about the effort and they say, 'Oh, we've been working on that for a couple of months; we've met with our senator and have been collecting petitions in our church.'"

Ms. Collins, US coordinator, says this "is the one thing that could give poor countries a significant boost." The aim is 2000, not only because of the millennium, "but to discipline ourselves and the international community not to just talk about it for another decade."