Whose Fault is it Anyway????
What are
illegitimate debts?
Illegitimate debts can be defined
as debts that have not benefited the
people of the countries who were given
them. The concept of illegitimate
debt examines the role of the lender.
It questions whether the lender should
have given the loan in the first place.
Debt and Development Coalition Ireland
argues that vast amounts of the remaining
debts currently owed by impoverished
countries should not have been given
as they did not benefit the people
of those countries in any way. This
is because many of these loans were
often given:
- For useless projects which failed
or never even got started.
- To corrupt political leaders who
stole the money or used it to oppress
their people.
- On unfair terms, with very damaging
conditions attached to the loan
We argue that if the lender should
not have given a loan, the lender
has no right to try to try to collect
the loan.
So are all
debts illegitimate? Are there any
loans which have benefited the people
in the countries that received them?
Not all debts are necessarily illegitimate.
Some loans accepted by impoverished
countries may have benefited the people
of those countries. That is why we
support the call of Jubilee South
(a network of Southern debt cancellation
campaigns) for people in South countries
to carry out 'debt audits' in order
to establish which loans their governments
should repay and which loans they
should not repay. This is why we are
calling on the Irish government to
support a public inquiry into the
debts owed to the World Bank and the
IMF.
But are
governments in impoverished countries
not responsible for the loans that
they take themselves? Why should we
blame the lender?
There are two levels of responsibilities
when it comes to giving and receiving
a loan:
Borrowing governments: should
only take loans that they can afford
to repay and that will be of benefit
to the people of the borrowing country.
Lenders: should not give loans
based on unfair terms. They should
not give loans with political and
economic conditions attached. They
should not give loans for activities
that will not benefit the people of
the borrowing country. Lenders should
not pressure impoverished countries
in any way to accept loans that they
may not want, or will be unable to
repay.
Action is needed in the North
and in the South: Social justice
activists in impoverished countries
are working to hold their own governments
to account for the loans which they
accept on their behalf. We, as activists
in the enriched world, must work to
ensure that our governments cancel
all illegitimate debts and stop lending
irresponsibly to impoverished countries.
Are there
any circumstances where a lender has
recognised a loan it has given as
illegitimate?
No government lender has thus far
recognised a loan as being illegitimate.
BUT, in 2006, the Norwegian
government cancelled debts owed to
it by 5 countries in the Global South
worth US$ 78 million. The Norwegian
government said that they had a "shared
responsibility" with
the borrower for the bad debts which
resulted from giving these loans.
This represents a ground-breaking
acknowledgement from within the lending
community that lenders should be held
accountable for providing irresponsible
loans.
What should the Irish government
do to bring about the cancellation
of illegitimate debts?
The Irish government should:
- Publicly recognise the concept
of illegitimate debts and call for
the cancellation of illegitimate
debts.
- Call for a public inquiry into
World Bank and IMF loans.
In addition to this, the Irish government
should:
- Call for a UN definition of illegitimate
debts.
- Work to ensure responsible future
lending practices at the World Bank
and IMF in order to ensure that
another debt crisis does not occur
again.
What can
I do to work for the cancellation
of illegitimate debts?
- You can contact your local T.D.
and ask her / him to raise this
matter in the Dáil especially
in advance of World Bank and IMF
meetings.
- You can write to the Minister
for Finance, the Minister for Foreign
Affairs and the Minister for Development
Co-operation and Human Rights and
ask them to take these important
steps.
