Guatemala: a study in human rights abuses

10 December 2012

On International Human Rights day, Jubilee Scotland examines the role of debt and international financial institutions on the people of Guatemala, and questions the role Scotland could play in gobal development.

By Charlotte Snelling.

For much of the post-war period, Guatemala’s past has been a story of dictatorships, terror, and genocidal regimes. It is estimated that 200,000 people have died as a result of murder, torture, and extreme poverty whilst the country continues to be affected by a legacy of successive odious governments. It remains one of the most impoverished countries in Latin America and ranks at just 131 on the United Nations Human Development Index, out of a total of 187 countries. In the Americas, only Haiti ranks lower.[1]

A recent report by Jubilee Debt Campaign has been launched to investigate the build up of sovereign debt in Guatemala and the role this has played, and continues to play, in reproducing poverty across the country, particularly in its rural areas. It looks at how debt has been accumulated, the impact on the country’s economy, society, and population, as well as the steps needed to ensure the people of Guatemala are not left paying for the illegitimate actions and unfair treatment endured at the hands of their former leaders.

Guatemala has a long history of debt and exploitation by foreign powers. In the late 1970s and early 1980s, when the wave of terror was at its highest level, foreign lending to the country increased substantially. Successive loans of between $100 million and $300 million every year were granted from 1978 to 1982 and by 1985 Guatemala’s debt had reached $2.2 billion, an increase of over $2 billion in just 10 years. The majority of this debt was owed to multilateral institutions, in particular the World Bank, and today the country is still paying these institutions back over $400 million every year. This undoubtedly has important implications for Guatemala’s ability to rebuild and develop its economy alongside providing essential services to its citizens. Money which could otherwise be spent on moving people out of poverty and developing essential infrastructure is being shipped out of the country and into the pockets of Western lenders.

Guatemalan women commemorate Rio Negro massacre

Guatemala, March 2009. Dozens gather to commemorate the 27th anniversary of the Rio Negro Massacre at Pak’oxom Peak in 1982. Photo: James Rodríguez / MiMundo.org

Significantly however, the loans granted to Guatemala were crucial in supporting the decades of terror its population endured, funding ill-conceived, unsustainable projects which impoverished families and led to displacement and destruction of rural communities. The Chixoy Dam is just one example but one which highlights some of the worst effects of the World Bank’s irresponsible lending. [2]In the late 1970s and early 1980s the Chixoy Dam project, $400 million of its budget financed by the World Bank and Inter-American Development Bank, acted only to exacerbate levels of violence and persecution against Guatemala’s indigenous people. In seeking to create a new reservoir as part of the project, the population of the Rio Negro region were threatened with eviction. When the local population resisted this pressure to move, their opposition was then exploited by the government as justification for counter-insurgency and increased violence against the Rio Negro community. It is estimated the project forcibly displaced more than 3,500 Mayan community members and led to 6,000 families suffering loss of land and livelihoods, with more than 400 people were massacred because of their opposition to the project. For the survivors the impact continues to be felt. A Probe International Report from 2001 states: “members of the Rio Negro community live in extreme poverty in comparison to neighbouring communities. However, before dam construction, the community enjoyed, relatively speaking, a high standard of living.”[3] Furthermore, World Bank loans for this project (and a second Chixoy Dam project in 1986) have cost Guatemalan governments $100 million in interest. The Chixoy Dam is a single example within a large back catalogue of odious debts originating from multilateral lending to Guatemala’s past dictatorial regimes. Worryingly the World Bank appears content to continue lending money to the country for new projects which threaten to exploit and impoverish even more communities.

As Barbara Rose Johnston at the Center for Political Ecology states, “the World Bank and Inter-American Development Bank… loans were the primary source of foreign aid to a nation ruled by a military dictatorship engaged in systematic state-sponsored destruction of Mayan peoples”[4]. Debt accrued in the period was loaned to illegitimate and unaccountable governments of which the lenders were well aware whilst only minimal, if any, token investigations into possible impacts of projects were conducted. It is unjust for new governments to be saddled with these debts and responsibility must be shared by the countries and multilateral organisations which funded and supported projects at the expense of the Guatemalan people.

The experience of Guatemala and this new report show that something needs to change. Not only should these illegitimate and destructive debts be cancelled, the accumulation of new odious debt has to be prevented. Lobbying for an audit of the debt in Guatemala and campaigning to force the World Bank to overhaul its current policy and apply ethical principles of justice, fairness, and sustainability to its future lending will be vital in this process.

Importantly though, we should also be looking closer to home. In the UK, UK Export Finance (previously the Export Credit Guarantee Department), a semi-autonomous government body existing to support UK exporters to enter in to international markets considered risky and where the likelihood of failure is high, has been responsible for numerous dodgy deals similar to that seen in Guatemala. Deals where UKEF is involved are typically made in the arms trade, aerospace or fossil fuel related industry (over 75 percent of UKEF’s observable transactions) and are often based in countries with unstable governments, despotic regimes, and areas of conflict, which further compounds their negative effects. Egypt, for example, owes the UK approximately £100mn which includes loans for arms made to the regimes of both Mubarak and his predecessor Sadat. Between 1985 and 1986 UKEF supported £250mn of arms sale loans to finance a tank factory near Cairo and a military city west of Alexandria.[5] As in Guatemala, the Egyptian people are now left paying for the actions of the governments which previously oppressed them.

Scotland has an opportunity to take a stand against unethical lending. It seems possible that, whatever the result of the referendum, Scotland will be given the powers to create export credits. We must campaign here to ensure that this agency will not follow the route of corrupt deals, human rights abuses and disregard for environmental considerations that has characterised UKEF, but instead lead the way in being a positive and socially responsible export agency, setting an example internationally of how exporters can be supported in a way that is ethical and fair[6].


[1] Jubilee Debt Campaign, 2012: Generating Terror – the role of international financial institutions in sustaining Guatemala’s genocidal regimes, p3

[2] Jubilee Debt Campaign, 2012: Generating Terror – the role of international financial institutions in sustaining Guatemala’s genocidal regimes, pp9-12

[3] Goldman, P, Kelso, C, and Parikh, M, 2001: The Chixoy dam and the massacres at Rio Negro, Agua Fria, Xococ, and Los Encuentros: A Report on Multilateral Financial Institution Accountability, The Working Group on Multilateral Institution Accountability Graduate Policy Workshop, Princeton

[4] Johnston,  BR, 2011: An Open Letter to Your Excellency, Alvaro Colom Caballeros, President of the Republic of Guatemala (reproduced on Counterpunch on 22 March 2011 as part of her work with International Rivers)

[6] Jubilee Scotland, 2012: Scotland: a new start on debt and exports, http://www.jubileescotland.org.uk/April12/debtbriefing

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Scotland, a nation of debt justice

1 May 2012

This blog first appeared on SCVO’s Future of Scotland website: http://www.futureofscotland.org/scotland-a-nation-of-debt-justice/

At Jubilee Scotland we think an independent Scotland could become the home of debt justice, meaning Scotland could hold no unfair debt, create no unfair debt, and could provide a place where countries suffering the effects of unfair debt could come to seek arbitration.

Unfair and unpayable debt is a huge global problem. Despite big steps forward, through mobilisations such as the Jubilee 2000, and Make Poverty History campaigns, some of the world’s poorest countries are still locked into a crippling cycle of debt. We believe there needs to be an appropriate mechanism to deal with this debt, especially given the growing economic crises we’re seeing in Europe.

An independent Scotland could become the home of this mechanism by promoting itself as a seat of fair and transparent arbitration for unfair and unpayable debt. By doing this, Scotland would not only be utilising its position as the holder of a strong arbitration act, but would take its place on the international stage as a home of economic justice.

Jubilee Scotland, together with the global movement working for debt justice created a set of bespoke rules on debt arbitration. These rules were presented by Fiona Hyslop MSP in March, and represent great progress towards making Scotland a centre of debt arbitration. Within just a few years, we could see Scotland offering itself as a destination for countries suffering unfair debt to seek justice. In addition to this, Scotland should take steps to ensure it is neither the holder nor creator of unfair global debt.

In the case of Scottish independence we do not know how Britain’s debt would be divided up, but one can assume that some of the debts owed to Britain will be passed over to Scotland. Many of these debts will be the result of failed exports; arms deals to dictators or ‘white elephant’ projects, which benefited British industry to the detriment of the host country.

Many of these deals will have resulted in human rights abuses, or environmental degradation, and in many cases, paying back the debts will have significant negative impacts on the lives of people in debtor countries. Very simply, when focus on government spending is on servicing debts over investment in healthcare and education, people will die. An independent Scotland must audit these debts and cancel those which it finds to be unjust.

Finally, Scotland must refuse to engage in unethical export practices. Currently Scottish companies receive financial support from UK Export Finance for international deals. With independence this function will be carried out by a Scottish department – most probably Scottish Development International. Care then must be taken to ensure that this does not follow the pattern of UK Export Finance but instead leads the way in becoming a positive and socially responsible export agency, with a strong focus on ethical guidelines and practices.

If Scotland commits to these three asks – to promote itself as a seat of arbitration , to audit and cancel its share of unfair debts owed to Britain, and to create an ethical export agency – it will prove itself a nation of debt justice.”


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 http://www.debtocracy.gr/indexen.html) 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.


Finance and Human Rights

4 January 2012

James Picardo, Campaign Director at Jubilee Scotland, spoke as part of the ‘Global Challenges’ series of events hosted by Edinburgh University. Here is what he said:

Economics on the one hand, and justice and human rights issues on the other hand, are often discussed as separate phenomena; as ways of looking at the world that don’t connect or intersect. But I believe that it’s of fundamental importance that we consider them alongside each other. In this blog I would like to use the example of Egypt’s arms debt to the UK to argue this point, touching on the gaps in international law and the importance of lending in the often violent shaping of the political map.

Jubilee Scotland is campaigning at the moment alongside its sister organisation – Jubilee Debt Campaign – for the cancellation of $100 million is owed by the Egyptian people to the UK government.

We are asking for it to be cancelled because we believe it to be an odious debt. An odious debt is one taken on by an unelected dictator – in this case Hosni Mubarak – the repayment for which is then demanded from the people of the country. This is the moral equivalent of someone breaking into your house and taking out a huge second mortgage against it, which you then have to repay when you get back into the house.

This would be enough to make the debt odious, but in the case of Egypt there is another layer to consider. The debt was used to pay for Rapier and Swingfire missiles, Lynx helicopters and a tank factory, weaponry which would actually have been used to shore up the illegitimate Mubarak regime. So to use our previous analogy, the house owner is also having to pay for the weapons that kept them out of their own house

Unfortunately, international law doesn’t recognise the concept of odious debt. This ties into the wider fact that it only recognises sovereign states and leaders; individuals, or whole peoples even, have no personality in its eyes. To go back to the house example, national law would seek to protect the interest of the party whose house had been stolen, but international law, if it operated the same way, would recognise the existence of the house, but assume that whoever was in charge of the house was the rightful owner – a kind of ‘finders-keepers’ approach to ownership. It is not a Code of Law in the true sense, as first formulated in ancient Babylon, because it does not protect the weak against the strong. It’s a system in which individuals – and whole peoples – are totally exposed to the Great Predators of the global economy: dictators, arms manufacturers, and lenders.

Mubarak’s arms debts are owed to a branch of the UK government called the Export Credit Guarantee Department (now renamed as UK Export finance), who use British tax-payers’ money to underwrite ‘high risk’ exports such as arms deals, meaning that both the arms exporter and the dictator remove themselves from the equation, leaving a debt owed by the people who suffered from the deal to us, the UK taxpayers.

The Export Credit Guarantee Department are the UK’s Export Credit Agency. Every major world power has one of these bodies, whose job it is to promote and support risky investments overseas. By using tax-payers’ money to underwrite deals they totally transform the risk profile of these risky deals, in effect creating a market where otherwise there wouldn’t be one.

For decades, Export Credit Agencies such as the ECGD have been used to set up trading relations with dictators in all parts of the world, including President Suharto in Indonesia and President Marcos in the Philippines. Their activities have provided domestic weapons manufacturers with stable overseas markets, have shored up regimes sympathetic to the West and have ensured a steady flow of debt repayments.

Export Credit Agency lending forms part of a wider portfolio of lending and aid – and it’s worth knowing that to qualify as ‘Overseas Development Assistance’ (the most widely used concept of aid) capital flows only have to have a 25% component of grant finances. This lending has been used for many decades to shape the map of the world, and to ensure that governments sympathetic to lending powers remained in charge of the house.

By sympathetic, we mean sympathetic to the supporting superpower, rather than sympathetic to the people of the country. As Franklin Roosevelt famously said of Nicaragua’s dictator Somoza, ‘he may be a son of a bitch, but he’s our son of a bitch.’

Because the bloody origins of many of these debts are not widely discussed, all debt campaigners are frequently asked whether we should in fact cancel debts to poor countries without being very vigilant on how the money is spent. To my mind this would be shutting the stable door after the horse has bolted. In the case of an Egypt or Indonesia the money for these debts has already been spent by a dictator on arms – often under the lender’s very vigilant eye.

Cancelling the debts is morally essential because it’s wrong to keep collecting money from the people whose oppression we have unwittingly colluded in. But if we are serious about stopping oppression we need to put a stop to bad lending, not just cancelling pre-existing bad debt.

In 1997, when Robin Cook became Foreign Secretary, he spoke of an ‘ethical foreign policy’. This statement was widely derided at the time as being a joke. In 1998, the scoffers were to some extent proved to be right, when the UK’s Export Credit Guarantee Department underwrote a huge sale of jet-fighters to the Indonesian dictator Suharto. The phrase ‘ethical foreign policy’ – even the idea of having an ethical foreign policy – became at this point even more bankrupt.

This trend needs I believe to be reversed. We may view ourselves as individuals, or as citizens of the world, we may campaign or give as individuals, and strive as campaigners to change the international system but we should not ignore the large proportion of our individual global impact which is mediated through UK foreign policy. It’s for this reason that, as well as building individual links with debt campaigners around the world, and while campaigning for an international system through which odious debts can be recognised and cancelled as as such, Jubilee Scotland also campaigns – alongside Campaign Against the Arms Trade and Amnesty International – for the radical reform of the Export Credit Guarantee Department.

Find our more about the campaign to end unfair lending at www.cleanupexports.org.uk and Jubilee Scotland at www.jubileescotland.org.uk


When creditors and debtors meet

1 December 2011

On October 5th, Jubilee Scotland  hosted a People’s Debt Tribunal at the Scottish Parliament, which saw Lidy Nacpil, representing Freedom from Debt Coalition Philippines and Jubilee South make the case for the cancellation of debt owed by the Philippines to the World Bank. Here an attendee of the Tribunal shares her thoughts.

‘Debt cancellation is a call not for charity but for justice’ – Lidy Nacpil.

By Olga Bloemen

We have a very fruitful partnership with the Philippines’, says the World bank ‘The World bank owes us for its damaging loans’, counters Filipino campaigner Lidy Nacpil. Jubilee Scotland is campaigning for the Scottish government to set up an international debt arbitration tribunal where creditors and debtors can meet. Thorough debt audits could help solve the debt crisis that is currently keeping developing countries in a poverty trap.

Third world debt seems to have disappeared from the public mind along with Jubilee 2000, Bono and Geldof. In 1998 and 2005, two initiatives pledged the one-off cancellation of the debts of 40 of the poorest countries. But, according to Jubilee Scotland, this remedy is ‘in many ways merely a sticking plaster’, offering too little too slowly: Many countries, like the Philippines, are excluded and debt is only cancelled to what is considered a ‘sustainable’ level, based on the country’s export earnings, while ignoring its domestic spending needs. Besides, the International Monetary Fund (IMF) and the World Bank demanded austerity measures in turn for debt cancellation like cuts on public spending and the privatisation of basic services, which many of the 40 countries have as yet not been able to meet.

This means that in 2008, the world’s poorest 48 countries still had debts totalling US$168 billion, and the 128 poorest together owed a dazzling total of US $3.7 trillion to multilateral bodies, individual countries, private companies, banks and individuals. Over the course of 2008 alone, the developing countries paid $602 billion towards servicing these debts. This year’s figures will be even higher, as the economic crisis has led developing countries to take up more loans. As a result, despite the aid rhetoric and the Millennium Development Goals, money keeps flowing from the Global South to the North instead of vice versa.

Many of the debts still stem from the 1960s and 1970s, when banks and governments in the North were eager to lend the huge amounts of money made from the rising oil prices to developing countries. Looking for Cold War allies, lending parties closed their eyes on corrupt or oppressive regimes and most of the money did not go into responsible hands and into development. In the 1970s and 1980s, the oil crisis led interest rates on the loans to soar. Additionally, falling commodity prices left countries with less hard currency to service the debts. The knock-on impact on exchange rates means that debts, which are most often counted in foreign currency, have skyrocketed in real terms for the affected countries. The debt total of US$3.7 trillion is the result.

Already since the early 1990s, campaigning organisations have called for an arbitration forum of some sort where historical cases of illegitimate or unfair debt can be lodged and solved, as well as unpayable debt relieved. With the 2010 Arbitration (Scotland) Act and the newly set up Scottish Arbitration Centre, Scotland would be a suitable host for such a tribunal. To demonstrate this, Jubilee Scotland organised a mock debt tribunal in Holyrood on the 5th of October. Here, the Philippines and the World bank met. Or, better said, Lidy Nacpil met “John Smith”, an actor who played, scarily realistically, a World bank representative quoting solely from the Bank’s official documents. In the debt tribunal, the legal principle of ex aequo et bono (“from equity and conscience”) was applied, according to which an arbitrator or tribunal has the power to move away from the law as laid down and to consider the case in the light of arguments of natural justice such as fairness and equity.

Lidy presented her country’s case: The New Economics Foundation has calculated that the Philippines need at least 63% debt cancellation in order for the government to meet the basic needs of its citizens, such as health, education and infrastructure, without taxing those living below the ‘ethical poverty line’ of $3 a day. According to a recent study, 107 countries are burdened with an ‘unpayable debt’ like the Philippines.

Former president Marcos, who governed the country from 1965 to 1985, left the Philippines with more than half of its current foreign debt. Although democratically elected, Marcos turned the Philippines into a dictatorship with martial law in 1972. When he fled the country in 1985, the country’s debt had gone from US$1 billion to of US$28 billion, most of it either stolen by Marcos or invested in failed or useless projects. The Bataan nuclear power plant is notorious in this regard. It was built by the US company Westinghouse on an earthquake fault-line at the foot of a volcano and has therefore remained unused. Westinghouse got paid generously nevertheless as the US government credit agency took over the standing debt. In 2007, the Filipino government finally completed paying off the $1.5 billion for the plant’s construction, more than 30 years after it began. As Marcos’ regime devastated the country’s economy, subsequent governments had to continue taking on loans to pay off the old ones.

During the fourteen-year dictatorship, the World bank granted five loans to Marcus. Now, the Philippines still owe the World bank around US $3 billion out of a total foreign debt of US $47,5 billion. The original loans from the World bank have long since been repaid, but because the interest has compounded, 80% of the debt is still owed. If nothing changes, Filipino taxpayers will continue to pay for the illegitimate debts of Marcos until 2025, 39 years after he was overthrown. While ‘Smith’ glorified the loans as an investment in pro-poor development, Lidy Nacpil said there is little evidence that the World bank has had any positive impact at all. ‘Debt cancellation is a call not for charity but for justice’, Nacpil concluded.

Of course, one could argue that debt cancellation would create poor incentives by making future borrowers hope that they will have their debts waived too. Also, developing countries are dependent on loans and if creditors would stop this flow of money due to lack of trust in return, the result could be disastrous, especially now in times of economic downturn. This, however, would relieve Northern countries of responsibility too easily. As we have seen, a major part of the third world debt is the result of the self-interested and reckless lending of first world creditors during the Cold War. Filipino people are currently forced to pay off a loan that was not taken up in their name and went to support an undemocratic dictator. The World bank could have reasonably foreseen this and should thus assume responsibility. Besides, one could argue that the Filipino people themselves never had a contractual arrangement with the World Bank.

The envisioned debt tribunal is just one step in creating a fairer lending system. Future loans should be given responsibly, on fair terms, and in a transparent way that is open to scrutiny by parliaments, media and citizens. Any loans given on unjust terms should be considered the responsibility of the creditor and thus eligible for cancellation in future. Jubilee’s mock tribunal demonstrated that debt arbitration can be done fairly and effectively. Or would it take a Bono to convince the Scottish government?