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how
the debt should be cancelled |
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Right now,
the creditors (eg. G8, IMF and World Bank) control the
debt issue.
- They make the rules
- They play judge and jury
- They decide how much a country should pay
- They do not question the legitimacy of the debt
- They do not consider whether debt repayments are
undermining human rights
The Heavily Indebted Poor Countries Initiative is totally
inadequate:
Out of the 24 countries in receipt of debt reduction
16 will still be spending more on debt than on health
while 10 will be spending more on debt than on health
and primary education combined.
We believe that if a real and lasting solution is to
be found, the debt crisis needs to be settled by an
independent body outside the control of the creditors
An independent 'fair and transparent process' to deal
with debt should
- be based on the application of justice and reason
- protect the human rights, and the human dignity
of the debtors as well as the creditors
- give citizens affected by the debt crisis a legal
right to have their voices heard in the resolution
of that crisis
- ensure freedom of information, transparency and
accountability to the public are central to the process
A fair and transparent process for dealing with
national debt is not a new idea
- In the aftermath of World War II, German debt service
payments were negotiated around the need for reconstruction
and development. The negotiations were managed independently
and included all of Germany's creditors including
Ireland
- In the 1970s, General Suharto of Indonesia was awarded
a very lenient debt settlement, in return for his
friendship with the West during the cold war.
- In both cases an ad-hoc independent process was
quickly organised and massive debt cancellation was
agreed.
The Jubilee Campaign in Ecuador sees a fair and independent
process as key to the establishment of a more stable
and equitable economic system, which benefits all of
humanity.
Why should we focus on this now?
The recent crisis in Argentina has highlighted the
need for an independent system to deal with unpayable
debt. Argentina is in crisis: They are unable to keep
up with their debt payments. There have been uprisings
across the country because of the collapse of living
standards. The IMF demands budget cuts which will lead
to further impoverishment.
Should Argentina struggle to repay its $147 billion
debt?
Argentina was ruled by an oppressive military regime
from 1976-l983. During this time
- 30,000 people disappeared
- debt increased 6 fold from $7.8bn to $46bn
- Billions of dollars of debts owed by private companies
were nationalised and became part of the country’s
public debt. Repayment of these debts became the responsibility
of the Argentinian people who neither authorised these
loans nor benefited from them. Among the companies
which benefited from the nationalisation of their
debts were: Mercedes-Benz Argentina, Ford Motor Co.
Argentina, IBM and Citibank
In 2000 An Argentinian Court found that
the debt from the military regime was illegitimate:
- There was no economic or financial justification
for the debt
- Foreign debt increased astronomically through the
implementation of economic policies which brought
the country to its knees
- The IMF was cited in the court for being co-responsible
in approving fraudulent loans
- The court is now looking at whether money borrowed
subsequently was to refinance debt from the military
machine
A new court case is examiningg whether loans taken
out after 1983 were used to repay debts incurred by
the military regime. It seems clear from the story of
Argentine’s debt over the past 25 years that much of
it is illegitimate and should not be repaid.
STOP THE IMF TAKING OVER
Recently the IMF announced their support for an international
process to deal with debt, however the IMF want:
- To play a central role - determining whether or
not debtor governments can petition for a suspension
of their debt payments
- The procedure to be confined to private creditors
only
- Debts owed to the IMF to be excluded
WE MUST MAKE SURE THAT THE IMF DOES NOT TAKE CONTROL
OF ANY NEW PROCESSTO DEAL WITH DEBT
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