International Women’s Day 2012

8 March 2012

It’s International Women’s Day, and what better reason to remind ourselves of one of the most compelling reasons for Jubilee Scotland’s work – that women are disproportionally affected by unfair and unpayable debt. The most basic reason for this is simply that debt causes poverty, and women make up 70% of the world’s poor. But it goes further than this, too, because when governments are forced to make huge debt repayments, or introduce ‘austerity measures’ to qualify for debt relief, the services which are affected are those with a bigger impact on women. Here are just a few examples:

  • In many countries, men are chosen to be educated over women. This means that when there is a fee to attend school, families often send sons and keep daughters at home. In Côte d’Ivoire, the government spends $500 a year on servicing debts, which means it is forced to charge fees even for primary school. Over half of school-age girls there do not attend school.
  • Women are also denied access to education because of an assumption that their place is in the home. When social services or basic healthcare provision is removed, women often have to leave school to care for young or elderly family.
  •  Women traditionally have responsibility for fetching water for their households. Water privatisation – a classic austerity measure advised by the International Monetary Fund – means an increased workload for these women.
  • Women produce 60 – 80% of the food in poor countries, and are often the first to suffer when government controls and assistance are removed in response to debt.
  • When governments are implementing austerity measures, or trying to increase revenue to pay back debt, farmers are often encouraged to grow cash crops rather than staple foods. This means that women’s work changes from providing food for the household, to providing money. As men usually control the money, women’s positions in the households are weakened, and money is far less likely to be spent on welfare

And all this is not even mentioning that fact that women – by virtue of having the ability to bear children – are going to be most affected by cuts in healthcare. Put simply, focussing on paying external debt rather than healthcare will mean more women die.

This is not just the case in poor countries. In Greece there have been reports of women in labour being turned away from hospitals because they cannot pay the necessary Є900 charge (equivalent to about 3 months rent). Even in Britain, where debt is being used as a reason to force through huge austerity measures, Ed Miliband called the plans “the biggest attack on women in a generation”.

As Yassine Fall, the eminent Senegalese economist has said: “the debt problem is a problem of economic justice because expenditure on debt service endangers women’s right to human development”. Whether we are talking about debt cancellation in the global south – in Uganda for example, debt cancellation has resulted in equal numbers of boys and girls attending school where before there were 20% fewer girls – or fighting against austerity measures closer to home, International Women’s Day is a chance to highlight the need for an economy based on equality.


Aid is Aid, not a Bribe

8 March 2012

by Alys Mumford

Now normally I manage to resist the urge to rise to a Daily Mail article I disagree with. But for this one:

‘Well that’s gratitude! We give India £1bm in aid, THEY snub the UK and give France a £13bn jet contact’

I’ve made an exception.

The article refers to a contract awarded by the Indian government to the French firm Dassault Rafale to provide 126 military jets to the Indian air force, over British firm BAE systems. This is seen to be an affront given that Britain’s aid package to India is 15 times larger that that of France. The contract was given to France ‘despite Government claims that the UK’s £1billion aid package to India would help secure the order’.

It has always been known that ‘aid’ is often understood by governments to be payment for favourable trade terms, a supportive vote in the UN, or money expressly to be used to hire foreign firms, but it is not normally put quite so clearly (by press or government). The outrage is almost refreshing.

The reason cited for the decision to buy the jets from France is one of cost – and this seems to be what has put a few noses out of joint. We give India money, they should spend it on buying our planes, regardless of cost, quality or suitability, the logic goes. This has happened countless times througout the past decades – Indonesia’s Suharto using British loans to buy weapons to persecute thousands of Indonesian civilians is the classic example.

Aid is aid; to give money expecting a lucrative arms deal to come out of it as a result is bribery, plain and simple.

Being Debt Campaigners in a World Preoccupied with Debt

13 January 2012

This blog post first appeared on Bright Green Scotland

By Alys Mumford DISCLAIMER: I work for Jubilee Scotland but am writing in my own capacity.

The world is changing: debt and deficit are front page news, the general public is becoming educated in the language of financiers, and the relative virtues of IMF policies are being discussed down the pub. Well..maybe that’s just the pubs I go to. But the fact cannot be escaped that debt is dominating the global mindset in a way which has not been seen before by my generation.

Traditional discourse around debt cancellation has focused predominantly around poor countries (those formerly known as ‘third-world’) in Africa and South America. Where debt cancellation has occurred, it has done so after adherence to certain conditions pushed by lenders; privatisation of healthcare, say, or the hiring of a foreign firm to complete infrastructure projects. The growing ‘debt crisis’ in the West forces us to change the way we speak about debt and its legitimacy.

As a campaigner working for the cancellation of unfair and unpayable debt, where does this leave me? Is the increased knowledge of the wider issues around money-lending a positive thing for our message, or is it merely a distraction, reinforcing the common response to any development work of ‘charity starts at home’. The global Jubilee movement needs to consider these questions.

I think we must see this, the public perception of the debt crisis, as a positive. To ignore it, or worse, to attempt to use the situation in Europe as a way to highlight how much worst things are for Africa and South America can only lead to a perceived irrelevance of the Jubilee movement. Yes, the Western debt crisis is replicating a situation which has raged for generations in poorer countries, but to suggest that this means we should ignore all debt issues which do not relate to the world’s poorest countries is short-sighted and morally questionable. It does, however. leave us with the question of whose debt are we talking about? Which debt are we trying to cancel? How do we classify an unfair debt? And, taken to it’s logical confusion, should the Jubilee movement be calling for an end to all debt, to the very concept of interest, and lending for profit?

Debt campaigning, though much of it has been led by a desire for poverty irradication and atonement for colonial sins, must at its heart focus on justice. This means fighting both for the cancellation of debt which was created via dictators such as Marcos in the Philippines, or money lost through corruption, but also debt whereby the paying of it will restrict access to healthcare, education and basic infrastructure. This used to mean countries such as Malawi (one of the 40 countries who qualified for debt cancellation under the Heavily Indebted Poor Counties Initiative) where the deprivation was easily recognisable and the public was appalled by the nonsensical system which led to $5 flowing out of the country in debt repayments for every $1 that flowed in as aid.

Now this classification can be applied to Greece, where the International Monetary Fund have enforced such strict austerity measures that the people of Greece have repeatedly taken to the streets in protest. A shocking statistic which features in the recent documentary Debtocracy (watch it free here is that in every country where IMF policies have been followed over a protracted period of time, average life expectancy has fallen by 5-10 years. Where debts are leading to deprivation and death, that debt must be deemed unpayable, and countries must have the autonomy to refuse to pay where their citizens are at risk.

This is a harder fight to win – it has always been easier to talk about debt in terms of poverty eradication, development, and the traditional language of aid. But fights should always be big enough to be worth fighting for.

Campaigning should be about finding alternatives. Not just cancelling old debts, but calling for an international financial system which doesn’t function by fleecing the poor and making money whatever the consequences. Where responsibility sits squarely with both lender and borrower, and where future generations are not held responsible for the crimes that went before them.

Both the Eurozone crisis and the events of the Arab Spring have highlighted the flaws at the centre of our current system. We must make the most of this – not by using it to show how a few very specific debt should be cancelled, but by using it to ask broader questions about the morality behind money.

EURODAD Publishes new parameters for Debt Tribunal

17 December 2009

EURODAD, the European Network on Debt and Development, has published a new set of parameters for the operation of a Debt Tribunal. The ten principles are summarised below, with the full document available also for download here:

1. Creation of a body independent of creditors: the sovereign debt work-out procedure must be independent of any creditor institution or body. This is essential to secure a level playing field and international support for the mechanism. This means that – as creditors – the International Monetary Fund and/or World Bank cannot host such a procedure because they would not been viewed as impartial decision-makers (they have an interest in recovering their claims). This
body may be permanent, for example under the auspices of the UN, or it may be ad-hoc and convene only to examine particular cases on demand. There should be the opportunity to go to mediation as a precursor to a binding arbitration procedure.

2. Independence of arbitrators: decision-makers should be neutral and independent from the
parties involved.

3. Mandated to verify the vailidity of individual claims based on any allegations of illegitimacy: the independent arbitrators will decide on the (il)legitimacy of individual credits based on precedent and clear indicators/criteria of illegitimate debt. For example, has the ex ante loan contraction process closely followed the principles outlined in EURODAD’s Charter on Responsible Financing? EURODAD believes that a sovereign debt work-out procedure must be
able to deal with issues related to the (il)legitimacy of debt, otherwise it cannot be considered a truly fair and comprehensive mechanism. Important gaps will exist.

4. Mandated to deal with generalised sovereign debt repayment problems: independent arbitrators will decide if individual credits are valid. Legitimate creditors’ claims will then be dealt with in one comprehensive process and all creditors will be treated equally and fairly. This will avoid the free rider problem evident from initiatives such as the HIPC Initiative where there is a perverse incentive to hold out. It will also help prevent vulture fund litigation because
it will, as a matter of principle, function on the basis of equal treatment of all creditor claims.

5. Process may be initiated by borrower or lender and the institution of automatic stay will apply: there will be a standstill on all external debt repayments in cases of sovereign debt default or on the individual (il)legitimate loan under dispute while the case is heard.1

6. Assessment of the indebted country’s economic situation by a neutral body: in cases of sovereign debt default, a debt sustainability analysis should be carried out by an independent body, such as a United Nations agency. This means that the IMF and World Bank – as creditors – cannot provide the only assessments of the country’s economic situation, although their databases will certainly be drawn upon by the independent body. The analysis should guide
arbitrators’ decisions on how far each legitimate creditor should take a haircut.

7. Protection of the basic obligations of the state to meet the essential needs and services of its citizens: the state must be assured the resources it needs to carry out its basic duty of care. Both domestic commercial and individual insolvency procedures, as well as Chapter 9 of the US-insolvency code which refers to the insolvency of municipalities, provide examples how”essential means” can be protected during any insolvency procedure.

8. Transparency: sovereign debt negotiations must be public and the results and agreements made must also be made public.

9. Participation: the procedure must be participatory and all stakeholders have the right to be heard. This includes borrowers, lenders and individuals/organisations which represent citizens in the debtor nation affected by decisions taken by the arbitration panel. All must argue, prove and document their points (rather than quibble between themselves which is the current situation). As a rule, proceedings should take place in the debtor country’s capital.

10.  Enforceability: all parties must respect the decision of the independent arbitrators. An international treaty establishing a sovereign debt work-out mechanism ratified by most nations would be extremely helpful; however is not a prerequisite for progress in this area. Current sovereign debt mamangement procedures (such as the Paris Club and HIPC Initiative) also function without any basis in international law. Instead they are based on the political will of of
creditors and the lack of alternative solutions. This underscores why an international sovereign debt work-out procedure must be independent of any creditor institution in order to ensure
broad-based support.

Defining illegitimate debt

24 November 2009

The problem of illegitimate debt is one of definition. Clearly we know that many – most even – of the debts owed by the poor countries of the world are bad, that they violate jus cogens, human rights, the peremptory norms of international law. Clearly we know that  by any reasonable moral standard, the loans extended to leaders like Mobutu and Marcos – with full knowledge of their misdeeds – should be cancelled without question, alongside those which were for projects that could never have been built, or loans which could never realistically have been repaid, or loans which simply disappeared into Swisss accounts. But nobody could argue that all debts were bad.

The problem is not therefore one of morality – the moral argument is black and white – but one of definition. Creditors have complex systems for defining and measuring concepts such as sustainability or payability, but how can we approach them asking for cancellation on the basis of legitimacy when there is no collectively agreed definition for that term? In this context the power to define becomes highly political. As one famous radical said: ‘Power is the ability to define things and have them react accordingly.’

The World Bank does an awful lot of defining. EUROAD, the European Network for Debt and Development, recently circulated a World Bank formula for establishing whether or not a debt was odious (a narrow subset of illegitimacy).

This excerpt shows – rather like Swift’s Laputa – how defining things bureaucratically tends to lead us quite quickly into the absurd. A juridical method for defining legitimacy – while producing an outcome that would probably satisfy nobody wholly – would at least create a definition that was meaningful enough to ground a productive debate. And with the bad debts still being collected, it’s vital that that debate happens soon.

On reading ‘I.O.U.’ by Noreen Hertz

29 June 2009

David was on the phone to Noreena Hertz’s agent the other day, trying to get her to speak on debt at one of the G20 events at St Andrews later in the year. I think the conversation was going really well until they started talking about costs! Anyway, you have to aim high… Overhearing the chat inspired me to get I.O.U. off the shelf – a book which I should probably have read five years ago. Rightly or wrongly we tend to regard 2005 as a water-shed year, but much of this book still seemed extremely up to date. One of the sections that most intrigued me was the last chapter, where she looked at solutions to what she refers to as the ‘holocaust’ of  international debt poverty. Plenty here to disagree with and inspire debate (nobody still thinks the IMF should be arbiter of it’s own cases, do they?) but one of the sections that gave me the most optimism was when she described two of the main obstacles standing in the way of Fair and Transparent Arbitration:

‘First, commercial and investment banks don’t want to see it happen. If it did, not only would they see some of their existing debts written down, they would also see the value of any relevant bonds that they or their clients were holding slashed. Their opposition has been completely unambiguous. An alliance of banks including Citigroup, JP Morgan Chase, UBS and Deutschebank responded to the IMF’s SDRM proposal with a statement to the effect that the plan was unworkable in any form. ‘no changes in any specific aspect of the plan’ would alter their ‘serious concern about the proposal,’ the banks said. And they wield immense political clout.

‘Second, despite Paul O’Neill’s support for a bankruptcy-type procedure while he was still in office, no one within the Bush Administration has got behind the idea since his abrupt resignation in December 2002. This is not surprising, given that all variants of this plan would entail the US handing over the de facto control it enjoys through the World Bank and the IMF  to a neutral authority. Multilateralism, as we all know, has not been high up the Bush Administration’s agenda.’ [Hertz, IOU, Harper Collins, 2004]

Reading this power analysis it occurred to me that both of these factors have changed – and changed in our favour. Clearly we have an administration in the US with a greater sympathy for multilateralism (as well as one which – thanks I’m sure to Jubilee USA – has already made a commitment to tackling the issue of odious debt). And as for the banks… well, they owe us one, don’t they? In fact, they owe us quite a few trillion…

Maybe one of the ways they could pay that back is by not interfering when we ask for an FTA?

James Picardo

North-South Illegitimate Debt Conference – 09/08 – Quito

17 September 2008

Debt campaigners from over thrity 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 Amercias 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 Ecuadorean 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.